MASTER 

NEGATIVE 
NO.  95-82500 


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Author: 


Holt,  William  Stull 


Title: 

The  Federal  Trade 
Commission 

Place: 

New  York 

Date: 

1922 


M- 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


MASTER   NEGATIVE  # 


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xi,  74-t>r-  22*"".  (Institute  for  government  research.  Service  mono- 
graphs of  the  United  States  government,  no.  7) 

Bibliography :  p.  48^4r 

p.  68-77. 


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THE  FEDERAL  TRADE  COMMISSION 

ITS  HISTORY,  ACTIVITIES 
AND   ORGANIZATION 


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THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 

Washington,  D.  C. 

The  Institute  for  Government  Research  is  an  association  of 
citizens  for  cooperating  with  pubHc  officials  in  the  scientific 
study  of  government  with  a  view  to  promoting  efficiency  and 
economy  in  its  operations  and  advancing  the  science  of  ad- 
ministration. It  aims  to  bring  into  existence  such  informa- 
tion and  materials  as  will  aid  in  the  formation  of  public  opin- 
ion and  will  assist  officials,  particularly  those  of  the  national 
government,  in  their  efforts  to  put  the  public  administration 
upon  a  more  efficient  basis. 

To  this  end,  it  seeks  by  the  thoroughgoing  study  and  exam- 
ination of  the  best  administrative  practice,  public  and  pnvate, 
American  and  foreign,  to  formulate  those  pnnciples  >yhich  he 
at  the  basis  of  all  sound  administration,  and  to  determme  their 
proper  adaptation  to  the  specific  needs  of  our  public  adminis- 
tration. ,  ,        T      .-^    ^  ^ 

The  accomplishment  of  specific  reforms  the  Institute  recog- 
nizes to  be  the  task  of  those  who  are  charged  with  the  respon- 
sibility of  legislation  and  administration;  but  it  seeks  to  assist, 
by  scientific  study  and  research,  in  laying  a  solid  foundation  ot 
information  and  experience  upon  which  such  reforms  may  be 

successfully  built.  ,.     .•  i     :« 

While  some  of  the  Institute's  studies  find  application  only  in 
the  form  of  practical  cooperation  with  the  admmistrative  of- 
ficers directly  concerned,  many  are  of  interest  to  other  admin- 
istrators and  of  general  educational  value.  The  results  ot 
such  studies  the  Institute  purposes  to  publish  in  such  torm  as 
will  insure  for  them  the  widest  possible  utilization. 


Officers 


Robert  S.  Brookings, 

Chairman 

James  F.  Curtis, 

Secretary 


Frank  J.  Goodnow, 

Vice-Chairman 

Frederick  Strauss, 

Treasurer 


Edwin  A.  Alderman 
Robert  S.  Brookings 
James  F.  Curtis 
R.  Fulton  Cutting 
Frederic  A.  Delano 
George  Eastman 
Raymond  B.  Fosdick 
Felix  Frankfurter 


Trustees 

Edwin  F.  Gay 
Frank  J.  Goodnow 
Jerome  D.  Greene 
Arthur  T.  Hadley 
Herbert  C.  Hoover 


Charles  D.  Norton 
Martin  A.  Ryerson 
Frederick  Strauss 
Silas  H.  Strawn 
William  H.  Taft 


A.  Lawrence  Lowell     Ray  Lyman  Wilbur 
Samuel  Mather  Robert  S.  Woodward 

Richard  B.  Mellon 

Director 

W.  F.  Willoughby 

Editor 

F.  W.  Powell 


1. 1 


INSTITUTE  FOR  GOVERNMENT  RESEARCH 

SERVICE  MONOGRAPHS 

OF  THE 

UNITED  STATES  GOVERNMENT 

No.  7 


THE    FEDERAL 
TRADE   COMMISSION 

ITS  HISTORY,  ACTIVITIES 
AND  ORGANIZATION 


BY 

W.  STULL  HOLT 


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W. 


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D.  APPLETON  AND  COMPANY 
NEW  YORK  LONDON 

1922 


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DAMAGED  PAGE(S) 


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Copyright,  1922,  by 
THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 


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PBINTXD  IK  THE  I7NIT9D  STATXS  OT  AlCXBICA 


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PUBLICATIONS  OF  THE 
INSTITUTE  FOR  GOVERNMENT  RESEARCH 


STUDIES  IN  ADMINISTRATION 

The  System  of  Financial  Administration  of  Great  Britain 

By  W.  F.  Willoughby,  W.  W.  Willoughby,  and  S.  M.  Lindsay 
The  Budget 

By  Rene  Stourm 
T.   Plazinski,  Translator;   W.  F.   McCaleb,  Editor 
The  Canadian  Budgetary  System 

By  H.  G.  Villard  and  W.  W.  Willoughby 

The  Problem  of  a  National  Budget 
By  W.  F.  Willoughby 

"*The  Movement  for  Budgetary  Reform  in  the  States 

By  W.  F.  Willoughby 

Teacher's  Pension  Systems  in  the  United  States 

By   Paul   Studensky 

^Organized  Efforts  for  the  Improvement  of  Methods  of  Ad- 
ministration in  the  United  States 

By  Gustavus  A.,  Wieber 

The  Federal  Service:    A  Study  of  the  System  of  Personal 
Administration  of  the  United  States  Government 

By  Lewis   Mayers 

The    System    of    Financial    Administration    of   the    United 
States   (In  Preparation) 

PRINCIPLES  OF  ADMINISTRATION 

Principles  Governing  the  Retirement  of  Public  Employees 

By  Lewis  Meriam 

Principles  of  Government  Purchasing 

By  Arthur  G.  Thomas 

Principles  of  Government  Accounting  and  Reporting 

By  Francis  Oakey,  C.  P.  A. 

Principles  of   Personnel  Administration 
By  Arthur  W.  Procter 

SERVICE  MONOGRAPHS  OF  THE  UNITED  STATES 
GOVERNMENT  oiaih^o 

The  Geological  Survey 

The  Reclamation  Service 

The  Bureau  of  Mines 
The  Alaskan  Engineering  Commission 
The  Tariff  Commission 

The  Federal  Board  for  Vocational  Education 
The  Federal  Trade  Commission 
The   Steamboat-Inspection  Service 
The  National  Parks  Service 
The  PubHc  Health  Service 
The  Weather  Bureau 
The  Employee's  Compensation  Commission 


♦  t. 


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y 


FOREWORD 

The  first  essential  to  efficient  administration  of  any  enter- 
prise is  full  knowledge  of  its  present  make-up  and  operation. 
Without  full  and  complete  information  before  them,  as  to 
existing  organization,  personnel,  plant,  and  methods  of  oper- 
ation and  control,  neither  legislators  nor  administrators  can 
properly  perform  their  functions. 

The  greater  the  work,  the  more  varied  the  activities  en- 
gaged in,  and  the  more  complex  the  organization  employed, 
and  more  imperative  becomes  the  necessity  that  this  informa- 
tion shall  be  available — and  available  in  such  a  form  that  it 
can  readily  be  utilized. 

Of  all  undertakings,  none  in  the  United  States,  and  few,  if 
any,  in  the  world,  approach  in  magnitude,  complexity,  and 
importance  that  of  the  national  government  of  the  United 
States.  As  President  Taft  expressed  it  in  his  message  to  Con- 
gress of  January  17,  1912,  in  referring  to  the  inquiry  being 
made  under  his  direction  into  the  efficiency  and  economy  of  the 
methods  of  prosecuting  public  business,  the  activities  of  the 
national  government  "are  almost  as  varied  as  those  of  the  en- 
tire business  world.  The  operations  of  the  government  affect 
the  interest  of  every  person  living  within  the  jurisdiction  of 
the  United  States.  Its  organization  embraces  stations  and 
centers  of  work  located  in  every  city  and  in  many  local  sub- 
divisions of  the  country.  Its  gross  expenditures  amotunt  to 
billions  annually.  Including  the  personnel  of  the  military  and 
naval  establishments,  more  than  half  a  million  persons  are  re- 
quired to  do  the  work  imposed  by  law  upon  the  executive 
branch  of  the  government. 

"This  vast  organization  has  never  been  studied  in  detail  as 
one  piece  of  administrative  mechanism.  Never  have  the 
foundations  been  laid  for  a  thorough  consideration  of  the  re- 
lations of  all  its  parts.  No  comprehensive  effort  has  been 
made  to  list  its  multifarious  activities  or  to  group  them  in  such 
a  way  as  to  present  a  clear  picture  of  what  the  government  is 
doing.  Never  has  a  complete  description  been  given  of  the 
agencies  through  which  these  activities  are  performed.     At 

•  • 
Vll 


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FOREWORD 


'  \ 


FOREWORD 


IX 


1 1 


no  time  has  the  attempt  been  made  to  study  all  of  these  activ- 
ities and  agencies  with  a  view  to  the  assignment  of  each  activ- 
ity to  the  agency  best  fitted  for  its  performance,  to  the  avoid- 
ance of  duplication  of  plant  and  work,  to  the  integration  of  all 
administrative  agencies  of  the  government,  so  far  as  may  be 
practicable,  into  a  unified  organization  for  the  most  effective 
and  economical  dispatch  of  public  business." 

To  lay  the  basis  for  such  a  comprehensive  study  of  the  or- 
ganization and  operations  of  the  national  government  as  Pres- 
ident Taft  outlined,  the  Institute  for  Government  Research 
has  undertaken  the  preparation  of  a  series  of  monographs,  of 
which  the  present  study  is  one,  giving  a  detailed  description  of 
each  of  the  fifty  or  more  distinct  services  of  the  government. 
These  studies  are  being  vigorously  prosecuted,  and  it  is  hoped 
that  all  services  of  the  government  will  be  covered  in  a  com- 
paratively brief  space  of  time.  Thereafter,  revisions  of  the 
monographs  will  be  made  from  time  to  time  as  need  arises,  to 
the  end  that  they  may,  as  far  as  practicable,  represent  current 
conditions. 

These  monographs  are  all  prepared  according  to  a  uniform 
plan.  They  give:  first,  the  history  of  the  establishment  and 
development  of  the  service;  second,  its  functions,  described 
not  in  general  terms,  but  by  detailing  its  specific  activities; 
third,  its  organization  for  the  handling  of  these  activities; 
fourth,  the  character  of  its  plant;  fifth,  a  compilation  of,  or 
reference  to,  the  laws  and  regulations  governing  its  operations ; 
sixth,  financial  statements  showing  its  appropriations,  expen- 
ditures and  other  data  for  a  period  of  years;  and  finally,  a  full 
bibliography  of  the  sources  of  information,  official  and  private, 
bearing  on  the  service  and  its  operations. 

In  the  preparation  of  these  monographs  the  Institute  has 
kept  steadily  in  mind  the  aim  to  produce  documents  that  will 
be  of  direct  value  and  assistance  in  the  administration  of  public 
affairs.  To  executive  officials  they  offer  valuable  tools  of  ad- 
ministration. Through  them,  such  officers  can,  with  a  min- 
imum of  effort,  inform  themselves  regarding  the  details,  not 
only  of  their  own  services,  but  of  others  with  whose  facilities, 
activities,  and  methods  it  is  desirable  that  they  should  be  fa- 
miliar. Under  present  conditions  services  frequently  engage 
in  activities  in  ignorance  of  the  fact  that  the  work  projected 
has  already  been  done,  or  is  in  process  of  execution  by  other 
services.  Many  cases  exist  where  one  service  could  make  ef- 
fective use  of  the  organization,  plant  or  results  of  other  serv- 


w.   f  I 


ices  had  they  knowledge  that  such  facilities  were  in  existence. 
With  the  constant  shifting  of  directing  personnel  that  takes 
place  in  the  administrative  branch  of  the  national  government, 
the  existence  of  means  by  which  incoming  officials  may  thus 
readily  secure  information  regarding  their  own  and  other  serv- 
ices is  a  matter  of  great  importance. 

To  members  of  Congress  the  monographs  should  prove  of 
no  less  value.  At  present  these  officials  are  called  upon  to 
legislate  and  appropriate  money  for  services  concerning  whose 
needs  and  real  problems  they  can  secure  but  imperfect  infor- 
mation. That  the  possession  by  each  member  of  a  set  of 
monographs,  such  as  is  here  projected,  prepared  according  to 
a  uniform  plan,  will  be  a  great  aid  to  intelligent  legislation 
and  appropriation  of  funds  can  hardly  be  questioned. 

To  the  public,  finally,  these  monographs  will  give  that 
knowledge  of  the  organization  and  operations  of  their  gov- 
ernment which  must  be  had  if  an  enlightened  public  opinion 
is  to  be  brought  to  bear  upon  the  conduct  of  governmental 
affairs. 

These  studies  are  wholly  descriptive  in  character.  No  at- 
tempt is  made  in  them  to  subject  the  conditions  described  to 
criticism,  nor  to  indicate  features  in  respect  to  which  changes 
might  with  advantage  be  made.  Upon  administrators  them- 
selves falls  responsibility  for  making  or  proposing  changes 
which  will  result  in  the  improvement  of  methods  of  adminis- 
tration. The  primary  aim  of  outside  agencies  should  be  to 
emphasize  this  responsibility  and  facilitate  its  fulfillment. 

While  the  monographs  thus  make  no  direct  recommenda- 
tions for  improvement,  they  cannot  fail  greatly  to  stimulate 
efforts  in  that  direction.  Prepared  as  they  are  according  to  a 
uniform  plan,  and  setting  forth  as  they  do  the  activities,  plant, 
organization,  personnel  and  laws  governing  the  several  serv- 
ices of  the  government,  they  will  automatically,  as  it  were, 
reveal,  for  example,  the  extent  to  which  work  in  the  same  field 
is  being  performed  by  different  services,  and  thus  furnish  the 
information  that  is  essential  to  a  consideration  of  the  great 
question  of  the  better  distribution  and  coordination  of  activi- 
ties among  the  several  departments,  establishments,  and  bu- 
reaus, and  the  elimination  of  duplications  of  plant,  organiza- 
tion and  work.  Through  them  it  will  also  be  possible  to  sub- 
ject any  particular  feature  of  the  administrative  work  of  the 
government  to  exhaustive  study,  to  determine,  for  example, 
what  facilities,  in  the  way  of  laboratories  and  other  plant  and 


\ 


X 


FOREWORD 


\ 


equipment,  exist  for  the  prosecution  of  any  line  of  work  and 
where  those  facilities  are  located ;  or  what  work  is  being  done 
in  any  field  of  administration  or  research,  such  as  the  promo- 
tion, protection  and  regulation  of  the  maritime  interests  of  the 
country,  the  planning  and  execution  of  works  of  an  engineer- 
ing character,  or  the  collection,  compilation  and  publication  of 
statistical  data,  or  what  differences  of  practice  prevail  in  re- 
spect to  organization,  classification,  appointment,  and  promo- 
tion of  personnel. 

To  recapitulate,  the  monographs  will  serve  the  double  pur- 
pose of  furnishing  an  essential  tool  for  efficient  legislation,  ad- 
ministration and  popular  control,  and  of  laying  the  basis  for 
critical  and  constructive  work  on  the  part  of  those  upon  whom 
responsibility  for  such  work  primarily  rests. 

Whenever  possible  the  language  of  official  statements  or  re- 
ports has  been  employed,  and  it  has  not  been  practicable  in  all 
cases  to  make  specific  indication  of  the  language  so  quoted. 


r 


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CONTENTS 

CHAPTER  ^^^* 

Foreword  ^*-* 

I.    History  ^ 

Government  Control  of  Industry ^ 

Sherman   Anti-trust   Act ^ 

Industrial  Commission ^ 

The  Bureau  of  Corporations 3 

Growth  of  the  Commission  Idea 5 

The  Federal  Trade  Commission  Act 6 

The  Clayton  Act ii 

War  Work  of  the  Commission I2 

The  Export  Trade  Act I4 

II.     Activities  ^7 

Quasi-judicial   Activities I7 

Prevention  of  Unfair  Methods  of  Competition  ...  17 

Trade    Practice    Submittal 23 

Master  in  Chancery 24 

Economic  Activities 25 

Corporation   Reports 25 

Special    Investigations      .      .      .      . 27 

Supervision  of  Export  Trade  Associations   ....  30 

III.    Organization  32 

Administrative  Division 32 

Legal   Division 34 

Economic  Division 35 

Personnel   and   Offices 35 

APPENDIX 

1.  Outline  of  Organization 37 

2.  Classification  of  Activities 44 

3.  Publications 46 

4.  Laws 48 

5.  Financial  Statement 64 

6.  Bibliography          68 

Index 79 


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V 


THE  FEDERAL  TRADE  COMMISSION 

ITS  HISTORY,  ACTIVITIES,  AND  ORGANIZATION 

CHAPTER  I 

HISTORY 

The  Federal  Trade  Commission  is  an  independent  establish- 
ment created  in  19 14,  whose  principal  duties  are  to  prevent 
unfair  methods  of  competition,  to  compile  and  investigate  the 
economic  facts  concerning  corporations  engaged  in  interstate 
commerce,  and  to  supervise  the  export  trade  associations 
formed  under  the  Export  Trade  Act. 

Government  Control  of  Industry.  The  relation  of  govern- 
ment to  industry  has  been  debated  throughout  the  entire  his- 
tory of  the  country  and  varying  policies  have  been  adopted 
from  time  to  time.  For  many  years  there  has  been  a  steady 
progress  toward  greater  government  supervision  over  industry. 
Each  successive  step  was  contested,  but  the  tendency  for 
greater  control  over  a  wider  field  has  prevailed.  When  the 
United  States  entered  the  World  War  the  Federal  Trade  Com- 
mission marked  the  furthest  point  reached  in  the  extension 
of  government  control  of  industry.  Greater  powers  were  ex- 
ercised by  the  Interstate  Commerce  Commission,  but  that  body 
dealt  only  with  public  utility  corporations,  the  common  car- 
riers, while  the  Federal  Trade  Commission  had  to  do  with  the 
broad  field  of  general  industry. 

The  modern  aspect  of  the  problem  began  after  the  Civil  War 
with  the  rise  of  big  business.  Soon  after  its  advent  came  the 
beginnings  of  modem  regulation.     These  were  the  state  rail- 

I 


!• 


>' 


2  THE  FEDERAL  TRADE  COMMISSION 

road  commissions/  which  served  as  a  model  for  the  Interstate 
Commerce  Commission  of  1887.  The  first  step  toward  the 
control  of  general  industry  was  the  Sherman  Anti-Trust  Act 
of  1890. 

Sherman  Anti-trust  Act.  This  law  is  the  starting  point  and 
background  for  all  the  discussion  of  government  control  of 
industry.  It  provides  that  "every  contract,  combination  in  the 
form  of  trust  or  otherwise,  or  conspiracy,  in  restraint  of  trade 
or  commerce  among  the  several  States,  or  with  foreign  nations, 
is  hereby  declared  to  be  illegal."  ^  It  gives  the  courts  of  the 
United  States  jurisdiction  to  prevent  and  restrain  violations  of 
the  act  and  charges  the  Attorney  General  with  the  duty  of 
instituting  proceedings  in  equity  to  prevent  and  restrain 
violations. 

This  method  of  dealing  with  monopolies  after  they  were 
formed  was  not  used  extensively  during  the  first  ten  years, 
despite  the  fact  that  it  was  a  period  of  industrial  consolidation. 
Particularly  between  the  years  of  1898  and  1901  when,  among 
the  many  others,  there  were  organized :  The  United  States 
Steel  Corporation,  The  American  Can  Company,  The  Amer- 
ican Woolen  Company,  The  United  Shoe  Machinery  Com- 
pany, The  International  Paper  Company,  The  American 
Locomotive  Company,  and  The  International  Steam  Pump 
Company. 

Industrial  ComniissiGn.  This  extraordinary  era  of  combi- 
nation attracted  wide  attention  and  caused  much  discussion 
of  the  "trust  problem."  In  1898  the  Industrial  Commission 
was  created  to  "investigate  questions  pertaining  to  immigra- 
tion, to  labor,  to  agriculture,  to  manufacturing  and  to  busi- 

^  Massachusetts  1869,  California  1876,  New  York  1882. 

2  On  May  15,  191 1  in  United  States  vs.  Standard  Oil  Co.  the  Su- 
preme Court  held  that  the  law  applies  only  to  combinations  in  un- 
reasonable restraint  of  trade,  thereby  apparently  reversing  earlier 
decisions  which  held  any  combination  illegal  regardless  of  the  de- 
gree of  restraint. 


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HISTORY  3 

ness."  The  investigations,  which  lasted  until  1902,  included 
the  trust  problem  to  which  much  time  and  attention  were 
devoted.  The  commission  recommended  greater  publicity 
regarding  the  operation  of  corporations  as  the  chief  measure 
of  reform.  This  was  to  be  obtained  by  Federal  supervision 
exercised  by  a  permanent  bureau,  "the  duties  of  which  shall 
be,  to  register  all  State  corporations  engaged  in  interstate  or 
foreign  commerce;  ...  and  to  collate  and  publish  infor- 
mation regarding  such  combinations  and  the  industries  in 
which  they  may  be  engaged,  so  as  to  furnish  to  the  Congress 
proper  information   for  possible   future  legislation." 

The  Bureau  of  Corporations.  Some  of  the  recommenda- 
tions of  the  Industrial  Commission  were  translated  into 
action  the  following  year  (1903)  when  the  Bureau  of  Cor- 
porations was  created.  This  bureau  was  the  direct  prede- 
cessor of  the  Federal  Trade  Commission,  into  which  it  was 
merged  when  the  latter  was  created  in  19 14. 

The  law  under  which  the  Bureau  of  Corporations  was 
created  was  section  6  of  the  act  establishing  the  Department 
of  Commerce  and  Labor  (32  Stat.  L.,  827)  reading  as  follows : 

Sec.  6.  That  there  shall  be  in  the  Department  of  Comnierce 
and  Labor  a  bureau  to  be  called  the  Bureau  of  Corporations, 
and  a  Commissioner  of  Corporations  who  shall  be  the  head 
of  said  bureau,  to  be  appointed  by  the  President,  who 
shall  receive  a  salary  of  five  thousand  dollars  per  an- 
num. 

The  said  Commissioner  shall  have  power  and  authority  to 
make,  under  the  direction  and  control  of  the  Secretary  of 
Commerce  and  Labor,  diligent  investigation  into  the  organ- 
ization, conduct,  and  management  of  the  business  of  any  cor- 
poration, joint  stock  company  or  corporate  combination  en- 
gaged in  commerce  among  the  several  States  and  with  foreign 
nations  excepting  common  carriers  subject  to  "An  Act  to 
regulate  commerce,"  approved  February  fourth,  eighteen 
hundred  and  eighty-seven,  and  to  gather  such  information 
and  data  as  will  enable  the  President  of  the  United  States 
to  make  recommendations  to  Congress  for  legislation  for  the 


\ 


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4  THE  FEDERAL  TRADE  COMMISSION 

regulation  of  such  commerce,  and  to  report  such  data  to  the 
President  from  time  to  time  as  he  shall  require;  and  the 
information  so  obtained  or  as  much  thereof  as  the  President 
may  direct  shall  be  made  public. 

In  order  to  accomplish  the  purposes  declared  in  the  fore- 
going part  of  this  section,  the  said  Commissioner  shall  have 
and  exercise  the  same  power  and  authority  in  respect  to 
corporations,  joint  stock  companies  and  combinations  subject 
to  the  provisions  thereof,  as  is  conferred  on  Interstate  Com- 
merce Commission  in  said  "Act  to  regulate  commerce"  and 
the  amendments  thereto  in  respect  to  common  carriers  so 
far  as  the  same  way  may  be  applicable,  including  the  right 
to  subpoena  and  compel  the  attendance  and  testimony  of  wit- 
nesses and  the  production  of  documentary  evidence  and  to 
administer  oaths. 

The  establishment  of  this  permanent  body  to  investigate 
and  to  publish  under  the  direction  of  the  President  the  infor- 
mation obtained,  in  some  ways  supplemented  the  Sherman 
Anti-Trust  Law  and  in  others  departed  radically  from  its 
basic  idea.  The  Sherman  Act,  at  least  until  191 1  when  the 
law  was  interpreted  to  mean  "unrea'-onable  restraint  of 
trade,"  failed  to  recognize  the  irresistible  movement  toward 
concentration  in  business.  Its  method  was  abolition  in  iso- 
lated cases  brought  to  its  attention  by  judicial  procedure. 
The  new  idea  involved  in  the  establishment  of  the  Bureau  of 
Corporations  was  the  recognition  of  the  inevitableness  and 
in  some  cases  of  the  desirability  of  industrial  combinations, 
in  spite  of  general  statutory  prohibition.  Its  method  of 
handling  the  problem  was  regulation  instead  of  repression. 
The  regulation  was  to  be  obtained  from  Congress  and. 
especially  from  the  force  of  public  opinion,  acting  on  infor- 
mation supplied  by  a  permanent  administrative  body  organ- 
ized and  trained  for  that  purpose.  This  new  conception  of 
the  "trust  problem"  was  not  universally  accepted  or  perhaps 
even  dominant  among  the  reasons  for  establishing  the  Bureau 
of  Corporations.  But  it  was  present,  and  it  continued  to 
spread.  In  each  of  the  annual  reports  of  the  Commissioner 
of   Corporations   the  idea  is  emphasized  and   the   necessity 


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HISTORY  S 

shown   for  broadening  the   national   control   into   a   general 
constructive  policy. 

As  it  was,  the  work  of  the  bureau  was  restricted  to  a  com- 
paratively small  scope.  The  most  conspicuous  pieces  of 
work  it  did  during  its  eleven  years  of  existence  were  the  in- 
vestigations of  the  Petroleum  Industry  (Standard  Oil  Com- 
pany), of  the  Tobacco  Industry,  and  of  the  International 
Harvester  Company.  In  each  case  the  work  was  done  under,  or 
the  results  used  to  supplement,  the  Sherman  Anti-Trust  Law 
by  aiding  the  Attorney  General  in  prosecuting  under  it. 
Experiences  during  these  investigations  showed  how  great  is 
the  force  of  mere  publicity.  Perhaps  the  best  illustration 
was  in  1906  when  the  great  system  of  secret  and  semi-secret 
railroad  discriminations  enjoyed  by  the  Standard  Oil  Com- 
pany was  made  public  by  the  bureau.  Immediately  all  the 
railroads  concerned  voluntarily  cancelled  every  rate  criticised 
as  illegal. 

Growth  of  the  Commission  Idea.  For  a  good  many  years 
there  had  been  evolving  a  new  agency  in  American  govern- 
ment for  executive  and  quasi- judicial  functions.  It  was  de- 
signed to  afford  more  speedy  and  informal  relief  than  that 
given  by  the  law  and  to  make  the  remedy  fit  the  circum- 
stances. This  idea  of  commissions  of  experts  gained  wide 
approval  and  many  people  thought  it  the  best  solution  of  the 
trust  problem.  By  19 12  it  had  become  so  popular  that  two 
of  the  three  big  parties  declared  in  their  platforms  for  the 
creation  of  an  independent  commission  to  deal  with  at  least 
some  phases  of  the  trust  problem.  On  January  20,  19 14, 
President  Wilson  delivered  a  special  message  to  Congress  on 
trusts  and  monopolies,  in  which  he  recommended  the  estab- 
lishment of  a  Federal  Trade  Commission.     He  said  in  part: 

And  the  business  men  of  the  country  desire  something  more 
than  that  the  menace  of  legal  process  in  these  matters  be  made 
explicit  and  intelligible.  They  desire  the  advice,  the  defin- 
ite   guidance,    and    information    which   can    be    supplied    by 


i 


6  THE  FEDERAL  TRADE  COMMISSION 

an  administrative  body,  an  interstate  trade  commission 
The  opinion  of  the  country  would  instantly  approve  of  such 
a  commission.  It  would  not  wish  to  see  it  empowered  to 
make  terms  with  monopoly  or  in  any  sort  to  assume  control 
of  business,  as  if  the  Government  made  itself  responsible. 
It  demands  such  a  commission  only  as  an  indispensable  in- 
strument of  information  and  publicity,  as  a  clearing  house 
for  the  facts  by  which  both  the  public  mind  and  the  managers 
of  great  business  undertakings  should.be  guided,  and  as  an 
instrumentality  for  doing  justice  to  business  where  the  proc- 
esses of  the  courts  or  the  natural  forces  of  correction  out- 
side the  courts  are  inadequate  to  adjust  the  remedy  to  the 
wrong  in  a  way  that  will  meet  all  the  equities  and  circum- 
stances of  the  case. 

The  Federal  Trade  Commission  Act.  Several  bills  to  ac- 
complish the  suggestions  of  President  Wilson  were  immediately 
introduced.  Similar  bills  had  often  been  in  Congress  during 
the  previous  three  years  but  had  never  been  successfully 
pushed.  In  this  instance  the  matter  was  taken  up  vigorously 
and   one    of   the   bills,   the    Newlands   bill,    was   ultimately 

approved. 

During  the  hearings  before  the  Committees  on  Interstate 
Commerce  two  of  the  activities  suggested  for  the  proposed 
commission  received  the  most  support.  The  first  was  that 
the  commission  should  have  power  to  relieve  the  doubts  of 
the  business  community  as  to  what  they  could  do  and  could 
not  do  under  the  Sherman  Anti-Trust  Law.  Some  sug- 
gested that  the  commission  should  be  able  to  pass  upon  plans 
of  cooperation  submitted  to  it  by  business  men,  and  if  it  de- 
cided such  cooperation  would  not  be  an  unreasonable  restraint 
of  trade  it  should  issue  a  license  to  be  held  during  good  be- 
havior or  a  certificate  which  would  be  an  estoppel  to  criminal 
proceedings  if  at  some  later  date  the  Attorney-General  should 
bring  suit  under  the  Sherman  Law  against  the  parties.  The 
second  suggested  activity  that  received  hearty  approval  was 
that  the  commission  should  receive  current  reports  from  all 
corporations,   or  at  least  all  the  large  ones,  in  the  various 


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V 


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HISTORY  7 

trades  and  that  it  should  make  public  this  information  thereby 
protecting  the  public  and  benefiting  the  business  community 
with  accurate  trade  statistics.  Neither  one  of  these  things 
has  been  done  by  the  commission.  The  first  is  not  done  be- 
cause the  law  as  passed,  gave  the  commission  no  authority  to 
do  this  in  any  way.  The  second  has  not  yet  been  accomplished 
because,  although  authorized,  legal  and  administrative  diffi- 
culties have  prevented,  as  will  be  shown  in  the  following  chap- 
ter. 

The  Newlands  bill  as  passed  was  substantially  the  same  as 
when  introduced  except  in  one  respect.  That  one  amendment 
was  Section  Sk  which  provided  that  unfair  competition  is  ille- 
gal and  directed  the  commission  to  prevent  unfair  competition 
in  the  way  prescribed.  Throughout  the  comparatively  long 
debate  in  the  Senate  this  section  was  the  center  of  discussion. 

The  bill  was  approved  on  September  26,  1914  (38  Stat.  L., 
717)  provided: 

That  a  commission  is  hereby  created  and  established,  to  be 
known  as  the  Federal  Trade  Commission  (hereinafter  re- 
ferred to  as  the  commission),  which  shall  be  composed  of  five 
commissioners,  who  shall  be  appointed  by  the  President,  by 
and  with  the  advice  and  consent  of  the  Senate.  Not  more 
than  three  of  the  commissioners  shall  be  members  of  the 
same  political  party.  The  first  commissioners  appointed  shall 
continue  in  office  for  terms  of  three,  four,  five,  six,  and  seven 
years,  respectively,  from  the  date  of  the  taking  effect  of  this 
Act,  the  term  of  each  to  be  designated  by  the  President,  but 
their  successors  shall  be  appointed  for  terms  of  seven  years, 
except  that  any  person  chosen  to  fill  a  vacancy  shall  be  ap- 
pointed only  for  the  unexpired  term  of  the  commissioner 
whom  he  shall  succeed.  The  commission  shall  choose  a 
chairman  from  its  own  membership.  No  commissioner  shall 
engage  in  any  other  business,  vocation,  or  employment.  Any 
commissioner  may  be  removed  by  the  President  for  ineffi- 
ciency, neglect  of  duty,  or  malfeasance  in  office*  A  vacancy 
in  the  commission  shall  not  impair  the  right  of  the  remain- 
ing commissioners  to  exercise  all  the  powers  of  the  commis- 
sion. 


\ 


8  THE  FEDERAL  TRADE  COMMISSION 

The  commission  shall  have  an  official  seal,  which  shall  be 
judicially  noticed. 

It  abolished  the  Bureau  of  Corporations  and  transferred  all 
the  bureau's  employees,  unexpended  funds,  and  records  to  the 
commission,  which  was  instructed  to  continue  all  the  pending 
investigations  and  proceedings  of  the  bureau. 

It  stated  "That  unfair  methods  of  competition  in  commerce 
are  hereby  declared  unlawful.  ^ 

*The  commission  is  hereby  empowered  and  directed  to  pre- 
vent persons,  partnerships,  or  corporations,  except  banks 
and  common  carriers  subject  to  the  Acts  to  regulate  com- 
merce, from  using  unfair  methods  of  competition  in  com- 
merce.'* 

It  then  outlined  the  way  in  which  the  commission  was  to 
carry  out  this  ^uty.     Briefly  stated  it  is :  that  whenever  the 
commission  has  reason  to  believe  that  a  corporation  is  using 
any  unfair   method   of   competition,   and   if   the  commission 
thinks  a  proceeding  would  be  to  the  interest  of  the  public,  it 
shall  issue  a  complaint  stating  the  charges  and  setting  a  date 
for   the  hearing.     The   corporation   accused   has   a   right  to 
appear  at  the  hearing  and  to  show  cause  why  an  order  to  cease 
the  practice  complained  of  should  not  be  issued.     The  testi- 
mony at   the  hearings   is   reduced   to   writing  and   kept  on 
file.     If  the  commission,  after  the  hearing,  decides  that  the 
method  of  competition  is  unfair,  it  makes  a  report  in  writing 
stating  its  findings  as  to  facts  and  issues  the  corporation  an 
order  to  cease  from  that  method  of  competition.     If  the  cor- 
poration does  not  obey  such  an  order,  the  commission  may 
apply  to  a  circuit  court  of  appeals  for  the  enforcement  of  its 
order.     Or  if  the  corporation  receiving  an  order  wishes  to,  it 
may  obtain  a  review  of  the  order  in  the  circuit  court  of  appeals. 
In  either  case  the  findings  of  the  commission  as  to  facts,  if 
supported  by  testimony,  is  conclusive. 
The  law  also  gave  the  commission  power 

3  The  law  defines  commerce  as  meaning  interstate  commerce. 


I 


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A 


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HISTORY  9 

(a)  To  gather  and  compile  information  concerning,  and 
to  investigate  from  time  to  time  the  organization,  business, 
conduct,  practices,  and  management  of  any  corporation  en- 
gaged in  commerce,  excepting  banks  and  common  carriers 
subject  to  the  Act  to  regulate  commerce,  and  its  relation  to 
other  corporations  and  to  individuals,  associations,  and  part- 
nerships. 

(b)  To  require,  by  general  or  special  orders,  corporations 
engaged  in  commerce,  excepting  banks,  and  common  carriers 
subject  to  the  Act  to  regulate  commerce,  or  any  class  of  them, 
or  any  of  them,  respectively,  to  file  with  the  commission  in 
such  form  as  the  commission  may  prescribe  annual  or  special, 
or  both  annual  and  special,  reports  or  answers  in  writing  to 
specific  questions,  furnishing  to  the  commission  such  infor- 
mation as  it  may  require  as  to  the  organization,  business, 
conduct,  practices,  management,  and  relation  to  other  cor- 
porations, partnerships,  and  individuals  of  the  respective  cor- 
porations filing  such  reports  or  answers  in  writing.  Such 
reports  and  answers  shall  be  made  under  oath  or  otherwise, 
as  the  commission  may  prescribe,  and  shall  be  filed  with  the 
commission  within  such  reasonable  period  as  the  commission 
may  prescribe,  unless  additional  time  be  granted  in  any  case 
by  the  commission. 

(c)  Whenever  a  final  decree  has  been  entered  against  any 
defendant  corporation  in  any  suit  brought  by  the  United 
States  to  prevent  and  restrain  any  violation  of  the  antitrust 
Acts,  to  make  investigation,  upon  its  own  initiative,  of  the 
manner  in  which  the  decree  has  been  or  is  being  carried  out, 
and  upon  the  application  of  the  Attorney  General  it  shall  be 
its  duty  to  make  such  investigation.  It  shall  transmit  to  the 
Attorney  General  a  report  embodying  its  findings  and 
recommendations  as  a  result  of  any  such  investigation,  and 
the  report  shall  be  made  public  in  the  discretion  of  the  com- 
mission. 

(d)  Upon  the  direction  of  the  President  or  either  House 
of  Congress  to  investigate  and  report  the  facts  relating  to  any 
alleged  violations  of  the  antitrust  Acts  by  any  corpora- 
tions. 

(e)  Upon  the  application  of  the  Attorney  General  to  in- 
vestigate and  make  recommendations  for  the  readjustment 
of  the  business  of  any  corporation  alleged  to  be  violating  the 
antitrust  Acts  in  order  that  the  corporation  may  thereafter 


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THE  FEDERAL  TRADE  COMMISSION 


maintain  its  organization,  management,  and  conduct  of  busi- 
ness in  accordance  with  law.  . 

(/)  To  make  public  from  time  to  time  such  portions  ot 
the  information  obtained  by  it  hereunder,  except  trade  secrets 
and  names  of  customers,  as  it  shall  deem  expedient  in  the 
public  interest ;  and  to  make  annual  and  special  reports  to  the 
Congress  and  to  submit  therewith  recommendations  for  ad- 
ditional legislation;  and  to  provide  for  the  publication  of  its 
reports  and  decisions  in  such  form  and  manner  as  may  be 
best  adapted  for  public  information  and  use. 

(g)  From  time  to  time  to  classify  corporations  and  to 
make  rules  and  regulations  for  the  purpose  of  carrying  out 

the  provisions  of  this  Act. 

(h)  To  investigate  from  time  to  time,  trade  conditions  m 
and  with  foreign  countries  where  associations,  combinations, 
or  practices  of  manufacturers,  merchants,  or  trades,  or  other 
conditions,  may  affect  the  foreign  trade  of  the  United  States, 
and  to  report  to  Congress  thereon,  with  such  recommenda- 
tions as  it  deems  advisable. 

To  enable  the  commission  to  gather  any  information  for 
any  of  the  above  purposes  the  law  gave  the  commission  wide 
investigatory  powers,  the  most  important  being  the  follow- 
ing: 

That  for  the  purposes  of  this  Act  the  commission,  or  its 
duly  authorized  agent  or  agents,  shall  at  all  reasonable  times 
have  access  to,  for  the  purpose  of  examination,  and  the  right 
to  copy  any  documentary  evidence  of  any  corporation  being 
investigated  or  proceeded  against;  and  the  commission  shall 
have  power  to  require  by  subpcena  the  attendance  and  testi- 
mony of  witnesses  and  the  production  of  all  such  documen- 
tary evidence  relating  to  any  matter  under  investigation. 
Any  member  of  the  commission  may  sign  subpoenas,  and 
members  and  examiners  of  the  commission  may  admimster 
oaths  and  affirmations,  examine  witnesses,  and  receive  evi- 

dence. 

Such  attendance  of  witnesses,  and  the  production  of  such 
documentary  evidence,  may  be  required  from  any  place  in 
the  United  States,  at  any  designated  place  of  hearing.  And 
in  case  of  disobedience  to  a  subpoena  the  commission  may 


t 


HISTORY 


II 


invoke  the  aid  of  any  court  of  the  United  States  in  requiring 
the  .attendance  and  testimony  of  witnesses  and  the  produc- 
tion of  documentary  evidence. 

The  Clayton  Act.  Almost  simultaneously  with  the  Federal 
Trade  Commission  Act  there  was  passed  the  Clayton  Act  ap- 
proved October  15,  1914  (38  Stat.  L.,  730).  Among  its 
provisions  were  four  sections  prohibiting  certain  specific  prac- 
tices and  authorizing  the  Federal  Trade  Commission  to  prevent 
them.  Apparently  they  would  have  come  under  the  general 
provision  of  the  Federal  Trade  Commission  Act  prohibiting 
unfair  methods  of  competition,  but  Congress  made  doubly 
sure  by  specifically  declaring  them  illegal. 

Section  2  prohibits  in  certain  cases,  price  discrimination 
where  the  effect  may  be  substantially  to  lessen  competition  or 
to  tend  to  create  a  monopoly  in  any  line  of  commerce. 

Section  3  prohibits  so-called  "tying  contracts,"  that  is,  con- 
tracts whereby  as  a  condition  of  sale  or  lease  of  commodities, 
the  seller  or  lessor  exacts  from  the  purchaser  or  lessee  an 
agreement  that  he  shall  not  use  or  deal  in  other  commodities 
except  those  furnished  by  the  seller  or  lessor,  where  the  effect 
may  be  substantially  to  lessen  competition  or  to  tend  to  create 
a  monopoly. 

Section  7  prohibits  "holding  companies"  or  the  ownership 
by  one  company  of  the  stock  of  another,  where  the  effect  may 
be  substantially  to  lessen  competition  between  the  companies 
or  to  tend  to  create  a  monopoly. 

Section  8  prohibits  "interlocking  directorates"  in  corpora- 
tions either  of  which  has  a  capital,  surplus,  and  undivided 
profits  aggregating  more  than  $1,000,000,  and  which  are  com- 
petitors, so  that  the  elimination  of  competition  by  agreement 
Ixtween  them  would  be  a  violation  of  any  of  the  anti-trust 
laws. 

The  procedure  outlined  for  the  enforcement  of  these  pro- 
visions by  the  Federal  Trade  Commission  is  identical  with  that 
of  the  Federal  Trade  Commission  Act  except  that  the  proviso 


I 


i 


'       !    . 


1 1 
'1 


12 


THE  FEDERAL  TRADE  COMMISSION 


that  the  proceedings  in  the  opinion  of  the  commission  would 
be  to  the  interest  of  the  public  is  omitted. 

War  Work  of  the  Commission.  *  Like  all  the  government 
services  the  Federal  Trade  Commission  was  called  upon  dur- 
ing the  World  War  to  help  in  the  emergency.  The  extra  work 
done  by  the  commission  was  chiefly  of  two  kinds;  the  investi- 
gation of  the  cost  of  production  of  various  commodities,  and 
the  execution  of  the  provision  of  the  Trading-with-the- 
Enemy  Act  that  had  to  do  with  the  granting  of  licenses  to  use 
enemy  owned  patent  and  copyrights. 

Cost  of  Production  Work.     It  was  the  policy  of  the  govern- 
ment after  entering  the  war  to  insist  on  reasonable  prices  for 
its  own  purchases.     Later  on  it  became  necessary  to  regulate 
prices  to  protect  itself  and  the  public.     To  do  this  intelligently, 
information  with  regard  to  production,  costs,  and  investments 
was  necessary.     The  President  directed  that  when  cost  infor- 
mation was  needed  the  various  branches  of  the  government 
requiring  such  information  should  obtain  it  through  the  Fed- 
eral Trade  Commission.  As  a  result  a  great  part  of  the  atten- 
tion and  energy  of  the  commission  was  devoted  to  this  work 
during  the  period  of  the  war.     Among  the  various  branches 
of  the  government  to  which  reports  were  rendered  on  produc- 
tion costs   of  commodities   were  the  War  Department,   the 
Navy  Department,  the  War  Industries  Board,  the  Fuel  Ad- 
ministration, the  Food  Administration,  the  Shipping  Board 
and  the  Emergency  Fleet  Corporation,  the  Railroad  Adminis- 
tration, the  Department  of  Agriculture,  the  Department  of  Jus- 
tice, the  Post  Office  Department,  and  the  Government  Printing 
Office.     In  no  instance  did  the  Federal  Trade  Commission  act 
as  a  price-fixing  body,  but  the  information  it  collected  was  used 
by  other  bodies  in  determining  prices. 

Altogether  some  264  of  these  confidential  cost  of  produc- 
tion reports  were  made.  The  methods  of  investigation  varied 

*  A  detailed  discussion  of  the  regular  work  of  the  commission  will 
be  found  in  the  following  chapter, 


12^  <- 


HISTORY 


13 


considerably,  but  in  most  cases  an  examination  of  the  books 
of  account  by  the  staff  of  the  commission  was  included.  In 
the  case  of  some  commodities  the  figures  were  kept  up  to  date 
by  means  of  monthly  reports  in  a  form  prescribed  by  the 
commission.  This  was  particularly  true  of  the  coal  industry, 
where  monthly  cost  reports  were  begun  in  August,  19 17,  and 
continued  up  to  and  including.  December,  1918.  After  that 
they  were  discontinued  because  the  Fuel  Administration  no 
longer  required  the  information. 

Work  under  the  Trading-with-the'Enemy  Act.  On  Oc- 
tober 6,  19 1 7,  the  Trading- with-the-Enemy  Act**  was  ap- 
proved. It  vested  in  the  President  certain  powers,  some  of 
which,  by  Executive  Order  of  October  12,  1917,  the  President 
delegated  to  the  Federal  Trade  Commission.  These  included 
authority : 

(a)  To  license  citizens  and  corporations  of  the  United 
States  to  make,  use,  and  vend  any  machine,  manufacture, 
composition  of  matter  or  design,  or  to  use  any  process,  trade 
mark,  print  label,  or  copyright  owned  or  controlled  by  an 
enemy  or  ally  of  enemy. 

(;&)  To  order  that  an  invention  be  kept  secret  and  the 
grant  of  a  patent  withheld  until  the  end  of  the  war,  whenever 
the  publication  of  an  invention  or  the  granting  of  a  patent 
may  be  detrimental  to  the  public  safety  or  defense  or  may 
assist  the  enemy,  or  endanger  the  successful  prosecution  of 
the  war. 

(c)  To  license  citizens  and  corporations  of  the  United 
States  to  file  and  prosecute  in  the  country  of  an  enemy  or  ally 
of  enemy,  applications  for  patents  or  for  registration  of  trade 
marks,  prints,  labels,  or  copyrights,  or  to  pay  any  taxes,  an- 
nuities or  fees  relating  thereto. 

The  authority  under  (c)  above  was  revoked  by  the  President, 
at  the  suggestion  of  the  commission,  in  an  Executive  Order 
issued  April  11,  1918,  and  after  that  date  no  licenses  werer 
issued  under  its  authority.     The  commission  issued  2940  or- 

^40  Stat.  L.,  411,       • 


If 


..■j.ri.j 


\ 


H 


THE  FEDERAL  TRADE  COMMISSION 


ders  to  keep  inventions  and  patents  secret  up  to  the  time  of 
the  armistice,  after  which  a  vacating  order  was  issued. 

The  most  important  work  done  in  this  field  was  that  done 
under  (a)  above.  The  commission  issued  licenses  permitting 
the  manufacture  and  sale  of  many  articles,  particularly  dyes 
and  drugs.  Some  of  these  were  not  only  necessary  for  the 
use  of  the  public  but  were  also  of  great  commercial  value. 
The  commission  was  given  wide  powers  in  deciding  what  per- 
sons should  receive  licenses  and  in  fixing  the  rate  of  the 
royalty  to  be  paid  to  the  Alien  Property  Custodian.  This 
money  is  a  trust  fund  for  the  enemy  owner  and  the  licensee, 
subject  to  the  disposition  of  the  court  in  case  the  enemy  owner 
during  the  year  following  peace  avails  himself  of  the  privilege 
accorded  him  by  the  act  of  filing  suit  to  recover  hjs  rights 
under  the  patent.  The  royalties  have  amounted  to  $833,- 
223.30  up  to  June  30,  1920.  After  the  armistice  the  prospect 
of  peace  decreased  the  number  of  applications  for  licenses. 
At  the  present  time  this  activity  of  the  commission  is  prac- 
tically ended,  although^  the  law  is  still  in  effect  pending  the 
proclamation  of  peace. 

The  Export  Trade  Act.  Among  the  powers  of  the  Federal 
Trade  Commission  was  one  permitting  it  to  investigate 
"trade  conditions  in  and  with  foreign  countries  where  associ- 
ations, combinations,  or  practices  of  manufacturers,  mer- 
chants or  traders,  or  other  conditions,  may  affect  the  foreign 
trade  of  the  United  States."  As  the  result  of  such  an  inves- 
tigation the  commission  found  that  American  exporters  were 
at  a  disadvantage  compared  with  their  rivals  in  the  chief 
foreign  exporting  countries,  where  combinations  for  the  export 
trade  were  effectively  developed.  As  it  was  the  fear  of  violat- 
ing the  anti-trust  laws  that  prevented  American  exporters  from 
developing  equally  effective  organizations  for  overseas  busi- 
ness, the  commission  recommended  legislation  to  make  it 
clear  that  such  organizations  would  be  permitted.  The  recom- 
mendation of  the  commission  and  the  great  interest  in  foreign 


HISTORY 


IS 


» 


trade  created  by  the  war  led  to  the  Webb-Pomerene  Act 
which  became  a  law  on  April  10,  1918.^ 

This  act  declares  that  the  Sherman  Anti-Trust  Act  of  1890 
shall  not  be  construed  as  declaring  illegal  associations  en- 
gaged solely  in  export  trade.  It  also  exempts  such  associa- 
tions and  members  of  them  from  that  section  of  the  Clayton 
Act  which  forbids  holding  companies.  At  the  same  time  it 
specifically  states  that  the  prohibition  against  unfair  methods 
of  competition  applies  to  the  export  trade,  and  it  requires  all 
export  trade  associations  to  report  to  the  Federal  Trade  Com- 
mission, their  officers,  stockholders  and  any  other  information 
about  membership,  conduct  or  management  that  the  commis- 
sion may  require.  The  Federal  Trade  Commission  is  charged 
with  the  duty  of  receiving  such  report  and 

Whenever  the  Federal  Trade  Commission  shall  have  reason 
to  believe  that  an  association  or  any  agreement  made  or  act 
done  by  such  association  is  in  restraint  of  trade  within  the 
United  States  or  in  restraint  of  the  export  trade  of  any 
domestic  competitor  of  such  association,  or  that  an  associa- 
tion either  in  the  United  States  or  elsewhere  has  entered  into 
any  agreement,  understanding,  or  conspiracy,  or  done  any 
act  which  artificially  or  intentionally  enhances  or  depresses 
prices  within  the  United  States  of  commodities  of  the  class 
exported  by  such  association,  or  which  substantially  lessens 
competition  within  the  United  States  or  otherwise  restrains 
trade  therein,  it  shall  summon  such  association,  its  officers, 
and  agents  to  appear  before  it,  and  thereafter  conduct  an  in- 
vestigation into  the  alleged  violations  of  law.  Upon  in- 
vestigation, if  it  shall  conclude  that  the  law  has  been  violated, 
it  may  make  to  such  association  recommendations  for  the 
readjustment  of  its  business,  in  order  that  it  may  thereafter 
maintain  its  organization  and  management  and  conduct  its 
business  in  accordance  with  law.  If  such  association  fails 
to  comply  with  the  recommendations  of  the  Federal  Trade 
Commission,  said  commission  shall  refer  its  findings  and 
recommendations  to  the  Attorney  General  of  the  United 
States  for  such  action  thereon  as  he  may  deem  proper. 

«40  Stat.  L.,  516. 


{ 


\\ 


i6         THE  FEDERAL  TRADE  COMMISSION 

For  the  purpose  of  enforcing  these  provisions  the  Federal 
Trade  Commission  shall  have  all  the  powers,  so  far  as  applic- 
able, given  it  in  '*An  Act  to  create  a  Federal  Trade  Commis- 
sion, to  define  its  powers  and  duties,  and  for  other  purposes." 


;) 


CHAPTER  II 


ACTIVITIES 


As  indicated  in  the  preceding  chapter,  the  Federal  Trade 
Commission  has  two  major  duties :  the  prevention  of  unfair 
methods  of  competition  in  interstate  commerce,  the  collection^ 
of  information  regarding  corporations  engaged  in  interstate! 
commerce  and  regarding  export  trade  associations.  Iri 
this  chapter  each  will  be  treated  in  turn,  and  the  attempt  will 
be  made  to  trace  in  detail  the  method  in  which  each  is  per- 
formed. In  both  the  aim  is  regulation,  to  be  obtained  in  the. 
first  case  by  quasi- judicial  action,  and  in  the  other  by  means ; 
of  publicity  or  by  other  governmental  agencies  acting  on  the 
information  supplied  by  the  Federal  Trade  Commission. 

Quasi-judicial    Activities.     The   law    declares    that    unfair 
methods  of  competition  in  interstate  commerce  are  illegal  and 
charges  the  Federal  Trade  Commission  with  the  duty  of  pre- 
venting them.     The  method  used  in  discharging  this  duty  is\ 
partly  outlined  by  the  law  and  partly  developed  by  the  com-  I 
mission.  ^^ 

Prevention  of  Unfair  Methods  of  Competition.  [With  } 
few  exceptions  the  proceedings  are  started  by  business  men 
who  write  to  the  commission  complaining  of  the  methods  of 
some  competitor.  As  the  proceedings  are  primarily  for  the 
purpose  of  protecting  the  public  interest,  the  names  of  the 
parties  complaining  are  not  disclosed  by  the  commission  ex- 
cept as  they  may  be  called  upon  to  furnish  evidence.  There 
are  obvious  reasons  for  this  policy.  Moreover,  the  com- 
mission can  and  sometimes  does  institute  proceedings  on  its 
own  initiative.  No  matter  how  the  attention  of  the  commis- 
sion is  called  to  the  practices  in  question,  a  formal  complaint 

17 


J 

i. 


I 


i8 


THE  FEDERAL  TRADE  COMMISSION 


cannot  be  issued  and  proceedings  started  unless  the  commis- 
sion has  "reason  to  beheve"  that  a  person,  partnership  or 
corporation  is  using  methods  forbidden  either  by  the  specific 
provisions  of  the  Clayton  Act  or  by  the  general  provision  of 
the  Federal  Trade  Commission  Act.  The  commission  must 
also,  if  the  complaint  is  to  be  issued  under  the  general  prohibi- 
tion, be  of  the  opinion  that  a  proceeding  would  be  in  the 
interests  of  the  public. 

These  important  points  are  determined  by  a  preliminary 
investigation  and  consideration  of  the  facts  disclosed  thereby. 
All  complaints  that  show  on  their  face  that  the  practice  com- 
plained of  is  not  unlawful  or  is  something  outside  the  juris- 
diction of  the  commission,  are  immediately  dropped  and  the 
person  complaining  informed  to  that  effect.  The  rest  are 
docketed  as  "applications  for  the  issuance  of  a  complaint"  and 
are  assigned  to  investigators  for  attention.  These  prelim- 
inary investigations  vary  with  each  case,  but  are  nearly  sure 
to  involve  lawyers,  economists,  and  accountants.  When  com- 
pleted the  investigator  reports  the  findings  and  recommends 
either  dismissal  or  the  issuance  of  a  formal  complaint.  The 
case  then  goes  to  a  board  of  review  composed  of  two  lawyers 
and  an  economist.  This  board  reviews  the  entire  investiga- 
tion and  makes  its  report  to  the  commission,  which  finally 
decides  whether  it  has  reason  to  believe  the  law  has  been 
violated  and  that  a  proceeding  would  be  in  the  interest  of 
the  public.  Experience  has  shown  that  about  two  out  of 
three  of  the  complaints  are  not  such  as  to  warrant  any  formal 
proceedings,  and  these  are  dismissed  without  publicity. 

During  the  first  two  years  the  commission  attempted  to 
establish  the  practice  of  disposing  of  a  good  many  cases  with- 
out formal  proceedings  even  though  there  appeared  to  have 
been  a  violation  of  the  law.  It  would  do  this  in  cases  where 
the  party  complained  of  would  agree  to  cease  from  the  prac- 
tices in  question  without  waiting  for  a  formal  proceeding. 
The  commission  would  publish  a  "conference  ruling"  on  the 


\\ 


) 


ACTIVITIES 


19 


points  in  the  case.  These  contained  no  names  and  were  for 
the  guidance  of  those  interested  in  the  opinions  of  the  com- 
mission with  regard  to  particular  practices  and  the  interpre- 
tation of  the  law.  The  commission  considered  that  this 
method  of  disposing  of  cases  would  not  only  save  much  time 
and  money  but  would  also  serve  the  public  interest  as  well 
as  a  formal  proceeding.  However,  after  the  experience  of 
two  years  the  commission  decided  that  the  results  did  not 
warrant  the  continuance  of  this  method  of  handling  com- 
plaints. The  "conference  rulings"  were  ineffectual  and  were 
not  such  orders  as  could  be  made  the  basis  of  enforcement 
proceedings.  No  more  "conference  rulings"  were  issued, 
and  since  then  formal  proceedings  have  been  held  in  all  such 
cases. 

The  number  of  applications  for  complaints  has  increased 
steadily  from  the  organization  of  the  commission,  as  the  fol- 
lowing table  shows. 

Application  for  Complaints 


Fiscal  Year 

Dock- 
eted 

Disposed  of 

Dismissed 

Formals  Served 

Total 

Organization  (March  16, 
1915)  to  June  30,  1915 
Ended  June  30,  1916 
Ended  June  30,  1917 
Ended  June  30,  19 18 
Ended  June  30,  19 19 
Ended  June  30,  1920 
Ended  June  30,  1921 

Totals 

112 
134 
153 
332 

535 
724 

426 
2416 

105 

79 
160 
301 

339 
357 

1349 

0 

3 

16 

80 

125 
220 

157 
601 

8 

108 

95 
240 

426 

559 
514 

1950 

When  a  formal  complaint  is  made  it  is  served  by  someone 
duly  authorized  by  the  commission  either  (a)  by  delivering  a 


I 


I 


i 


20         THE  FEDERAL  TRADE  COMMISSION 

copy  to  the  person  to  be  served,  or  to  a  member  of  the  partner- 
ship to  be  served,  or  to  an  executive  officer  or  a  director  if 
it  is  a  corporation;  or  (b)  by  leaving  a  copy  of  the  complaint 
at  the  principal  office  or  place  of  business  of  the  person,  part- 
nership, or  corporation;  or  (r)  by  sending  one  there  by  regis- 
I  tered  mail.  A  complaint  thus  served  contains  the  charges 
\  and  gives  notice  of  a  hearing  to  be  held  on  a  certain  day,  at 
\  least  forty  days  after  the  service  of  the  complaint.  Atten- 
tion is  also  called  in  the  complaint  to  that  rule  of  practice 
before  the  Federal  Trade  Commission  requiring  a  written 
answer  within  thirty  days  from  the  service  of  the  complaint. 
This  answer  "shall  contain  a  short  and  simple  statement  of 
the  facts  which  constitute  the  ground  of  defense.  It  shall 
specifically  admit  or  deny  or  explain  each  of  the  facts  alleged 
in  the  complaint,  unless  the  defendant  is  without  knowledge 
in  which  case  he  shall  so  state,  such  statement  operating  as 
a  denial." 

Although  the  law  says  the  defendant  has  the  right  to  show 
cause  why  an  order  should  not  be  entered  by  the  commission 
requiring  him  to  cease  and  desist  from  the  violation  of  the 
law  as  charged,  the  commission  has  assumed  that  the  burden 
of  proof  is  on  it  to  establish  the  allegations  of  the  complaint. 
Consequently  the  defendant  is  not  required  to  bring  any  wit- 
nesses on  the  date  fixed  by  the  complaint.  The  usual  prac- 
tice on  that  date  is  to  fix  a  time  and  place  for  the  beginning 
of  the  taking  of  testimony.  The  testimony  is  usually  taken 
before  an  examiner  of  the  commission  who  has  had  ex- 
perience in  trials  in  the  courts.  He  passes  upon  the  admis- 
sibility of  the  evidence  presented  at  the  hearings  before  him. 
But  before  the  taking  of  the  testimony  is  finally  closed,  either 
party  objecting  to  the  ruling  of  the  examiner  upon  the  intro- 
duction of  evidence  may  have  such  ruling  reviewed  by  the 
commission.  Subpoenas  requiring  the  attendance  of  witnesses 
or  the  production  of  documentary  evidence  can  be  issued 
by  any  member  of  the  commission.  Witnesses  receive  the 
same  fees  and  mileage  that  are  paid  witnesses  in  the  courts  of 


ACTIVITIES 


21 


the  United  States.  In  cases  where  sufficient  cause  can  be 
shown  testimony  may  be  taken  by  deposition.  If  the  respon- 
dents are  surprised  or  unprepared  for  the  cross-examination 
of  witnesses  who  testify  in  support  of  the  commission's  com- 
plaint, the  commission  will  recall  such  witnesses  at  a  later 
date  for  cross-examination.  After  the  testimony  to  support 
the  complaint  has  been  presented  the  respondents  are  given 
a  reasonable  length  of  time  to  prepare  evidence  to  be  given  in 
support  of  their  answer  or  in  rebuttal  of  the  testimony  pre- 
sented in  support  of  the  complaint.  In  the  proceedings  the 
commission  is  represented,  and  the  evidence  is  offered,  by 
attorneys  while  the  respondent  may  appear  in  person  or  be 
represented  by  counsel.  When  the  evidence  has  all  been  in- 
troduced before  the  examiner,  the  attorneys  on  both  sides 
present  to  the  commission  briefs  of  the  law  and  facts.  The 
pleadings,  evidence,  and  summary  thereof  are  also  presented 
to  the  commission.  The  covmsel  for  the  respondent  can,  if 
it  is  desired,  make  oral  argument  before  the  commission. 
The  commission  then  makes  its  findings  as  to  the  facts  and 
issues  its  order  to  cease  and  desist  from  the  practices  com- 
plained of  or  dismisses  the  case. 

If  the  respondent  fails  to  obey  the  order  the  commission 
may  apply  to  the  circuit  court  of  appeals  in  any  circuit,  where 
the  method  of  competition  in  question  is  used  or  where  the 
respondent  resides  or  carries  on  business,  for  the  enforce- 
ment of  its  order.  Or  if  the  respondent  receiving  an  order 
to  cease  and  desist  wishes  to,  he  may  obtain  a  review  of  the 
case  in  the  circuit  court  of  appeals,  which  has  authority  to 
affirm,  set  aside,  or  modify  the  order  of  the  commission. 
In  either  case  a  transcript  of  the  record  is  filed  in  a  circuit 
court  of  appeals  of  the  United  States.  But  the  findings  of 
the  commission  as  to  facts  are  conclusive  if  supported  by 
testimony.  If  either  party  applies  to  the  court  for  leave  to 
adduce  additional  evidence,  the  court  may  order  such  evidence 
to  be  taken  before  the  commission.  The  commission  can  then 
modify  its  findings  as  to  facts  or  change  its  order  in  the 


c 


\i 


22 


THE  FEDERAL  TRADE  COMMISSION 


ACTIVITIES 


23 


f,    f 


light  of  the  new  evidence.  Of  the  thirty  appeals  to  court 
that  have  been  made  up  to  June  30,  192 1,  there  have  been 
seventeen  decided,  fifteen  unfavorably  to  the  commission  and 
two  favorably.^  Several  of  these  have  been  taken  to  the 
Supreme  Court  on  appeal,  and  more  are  likely  to  be,  as  the 
time  limit  for  appeals  has  not  expired. 

The  following  table  shows  the  number  and  status  of  the 
formal  complaints  that  have  been  issued  so  far.^ 

Formal  Complaints 


Disposed  of 

Dis- 

Orders to 

Cases 

Fiscal  Year 

Served 

missed 

Cease  and 

Total 

Ap- 

Desist 

pealed 

Organization    (March    16, 

1915  to  June  30,  1915 

0 

0 

0 

0 

0 

Ended  June  30,  1916 

5 

0 

0 

0 

0 

Ended  June  30,  1917 

9 

I 

3 

4 

0 

Ended  June  30,  1918 

154 

7 

71 

78 

0 

Ended  June  30,  1919 

135 

13 

75 

88 

4 

Ended  June  30,  1920 

308 

43 

112 

155 

7 

Ended  June  30,  1921 

^77 

37 

118 

155 

19 

Totals 

788 

lOI 

379 

480 

30 

Analysis  of  the  charges  in  the  formal  complaints  served  up 
to  June  30,  1 92 1  shows  that  thirty-nine  complaints  have 
charged  violations  of  Section  2  of  the  Clayton  Act  (prohib- 
iting   price    discrimination) ;    ninety-three    complaints    have 

1  A  good  many  of  these  cases  contained  practically  identical  prin- 
ciples. 

2  The  discrepancies  in  this  and  the  table  of  applications  between 
the  number  of  applications  going  to  formal  complaints  and  the  num- 
ber of  the  latter  served,  are  due,  on  the  one  hand,  to  the  consolida- 
tion of  applications  against  similar  respondents,  and,  on  the  other, 
to  the  fact  that  some  applications  have  several  respondents  who  were 
preceded  against  individually. 


. 


charged  violations  of  Section  3  of  that  act  (prohibiting 
"tying  contracts")  ;  twenty-six  complaints  have  charged  viola- 
tions of  Section  7  of  the  act  (prohibiting  "holding  com- 
panies"), two  complaints  have  charged  violations  of  Section 
8  of  the  Clayton  Act  (prohibiting  "interlocking  director- 
ates") ;  three  complaints  have  charged  violations  of  Section  4 
of  the  Export  Trade  Act;  and  in  eight  hundred  and  twenty- 
one  complaints  there  have  been  charges  of  violations  of  the 
general  prohibition  of  unfair  methods  of  competition  contained 
in  Section  5  of  the  Federal  Trade  Commission  Act. 

The  list  of  the  particular  methods  of  competition  that  have 
been  condemned  by  the  commission  as  being  unfair  and  in  vio- 
lation of  the  law,  is  a  long  one.^  Among  the  most  wide-spread 
and  far-reaching  unfair  methods  of  competition  is  commer- 
cial bribery.  The  commission  has  devoted  much  attention  to 
this  practice,  and  on  May  15,  191 8,  submitted  a  special  report 
on  it  to  Congress  in  accordance  with  that  part  of  Section  6 
of  the  Federal  Trade  Commission  Act  which  authorizes  them 
to  "make  special  reports  to  Congress  and  to  submit  therewith 
recommendations  for  additional  legislation."  The  report 
called  the  attention  of  Congress  to  the  fact  that  the  commission 
has  no  criminal  jurisdiction  and  in  dealing  with  commercial 
bribery  it  was  limited  to  one  side,  the  giving  side,  and 
urged  Congress  to  pass  a  strong  law  against  the  practice  mak- 
ing both  giving  and  receiving  a  crime.  Furthermore,  in  several 
industries,  notably  the  paint  and  varnish,  the  printing  ink,  and 
the  ship  chandlery  and  repair  business,  where  bribery  was 
very  wide-spread,  the  commission  not  only  has  issued  many 
complaints  but  also  is  cooperating  with  a  trade  association 
in  each  one  to  stamp  out  the  practice. 

Trade  Practice  Submittal.  In  19 19  the  commission  began 
a  new  procedure,  the  trade  practice  submittal,  to  supplement  its 
restrictive  procedure  in  preventing  unfair  methods  of  competi- 
tion.    This  is  an  attempt  to  eliminate,  simultaneously  and  by 

^A  list  of  the  most  common  and  important  of  the  methods  con- 
demned is  published  in  the  Annual  Report  of  the  Federal  Trade  Com- 
mission for  the  fiscal  year  ended  June  30,  1920. 


./ 


!     i 


I 


'      ' 


24         THE  FEDERAL  TRADE  COMMISSION 

the  consent  of  those  engaged  in  a  given  industry,  practices 
which  are  unfair  in  the  opinion  of  the  industry  as  a  whole. 
It  is  employed  in  cases  where  a  large  number  of  complamts 
come  to  the  commission,  usually  from  persons  in  the  industry, 
respecting  a  number  of  alleged  unfair  practices  generally  prev- 
alent in  the  industry.     A  public  meeting  of  representatives 
of  the  entire  industry  is  held  in  the  presence  of  the  commis- 
sion, at  which  are  discussed  the  merits  and  demerits  of  the 
business  practices  which  have  been  generally  complained  of. 
The  findings  of  the  meeting  are  submitted  to  the  commission, 
as  the  judgment  of  the  industry  upon  the  practices  prevail- 
ing in  it.     The  commission  makes  no  decisions  or  ruhng  and 
does  not  consider  itself  bound  by  the  findings  but  does  regard 
them  as  prima  facie  law  merchant  for  the  industry.     Trade 
practice  submittals  have  been  obtained  in  the  following  indus- 
tries :  oil,  pyroxylin  plastics,  knit  goods,  macaroni,  used  type- 
writers, creamery,  and  book  and  writing  paper.     The  results 
vary,  but  those  in  the  last  mentioned  industry  are  typical. 
After  two  conferences  before  the  commission  600  dealers  and 
manufacturers  of  book  and  writing  paper  signed  an  agree- 
ment pledging  themselves;  (i)  not  to  label  papers  as  "hand- 
made"  unless  they  are  actually  made  by  hand  and  not  by 
machine;  (2)  not  to  label,  advertise,  or  sell  papers  that  are 
given  fabric  or  other  material  names  because  of  a  finish  applied 
to  them,  under  such  name  unless  a  qualifying  word,  or  words, 
be  used  to  indicate  that  the  name  is  applied  to  indicate  finish 
only;  such  as  "linen  finish,''  "Onyx  finish,"  etc.;  (3)  not  to 
label,'  advertise,  or  offer  for  sale  under  a  foreign  geographical 
name  papers  not  of  a  foreign  make,  without  the  use  of  words 
indicating   domestic   manufacture,   as    "made   in   the   U.    S. 
A.";  (4)  not  to  label,  advertise,  or  sell  paper  as  parchment 
paper  without  the  use  of  quahfying  words  to  indicate  its  true 
character,  as  "artificial  parchment"  or  "vegetable  parchment." 
Master  in  Chancery.     The  law  provides  that  in  certain  cir- 
cumstances the  courts  can  refer  suits  in  equity,  brought  by  the 
direction  of  the  Attorney  General  as  provided  in  the  anti-trust 


\ 


ACTIVITIES 


25 


acts,  to  the  Federal  Trade  Commission  as  a  master  in  chancery. 
Up  to  the  present  time  this  has  not  been  done,  but  it  consti- 
tutes a  quasi-judicial  duty  which  the  commission  may  be  called 
upon  to  perform  at  any  time. 

Economic  Activities.  The  economic  activities  of  the  com- 
mission have  in  some  cases  led  to  quasi- judicial  proceedings 
but  for  the  most  part  are  entirely  distinct  from  the  other 
work  of  the  commission.  They  are  divided  into  collecting 
corporation  reports,  making  special  investigations,  and  super- 
vising export  trade  associations. 

Corporation  Reports.  As  indicated  above  the  legislative 
history  of  the  commission  and  the  debates  in  Congress  show 
it  was  contemplated  that  the  commission  would  use  extensively 
the  powers  given  to  it  to  require  current  reports  from  cor- 
porations engaged  in  interstate  commerce.  These  were  to 
make  available  to  the  governnxcnt,  to  industry,  to  labor,  and 
to  the  public,  comprehensive  and  accurate  data  concerning  the 
economic  situation  of  the  basic  industries  of  the  country.  It 
was  natural  under  these  circumstances  that  this  activity  oc- 
cupied a  considerable  part  of  the  commission's  attention  im- 
mediately after  it  was  organized.  The  commission  found 
that,  before  any  extensive  plan  could  be  put  in  operation, 
much  educational  work  would  be  required  to  bring  about  an 
improvement  in  the  methods  of  accounting  used  by  business 
corporations,  particularly  with  respect  to  accurate  and  uni- 
form methods  of  cost  accounting.  Upon  this  depended  the 
value  of  the  corporation  reports  and  the  difficulty  both  to  the 
commission  and  to  the  corporations  of  gathering  and  com- 
piling them.  Consequently  the  commission  in  cooperation 
with  the  American  Association  of  Public  Accountants  pre- 
pared several  publications  to  educate  manufacturers  and  mer- 
chants in  proper  accoimting  methods. 

During  the  first  year  of  its  existence  the  commission  pre- 
pared a  schedule  of  questions  covering  only  certain  funda- 
mental data  for  which  the  books  of  every  corporation  should 


./ 


>^S'' 


26 


THE  FEDERAL  TRADE  COMMISSION 


furnish  an  answer.  A  total  of  289,460  of  these  schedules 
were  sent  out  to  three  classes  of  corporations  as  follows: 
(i)  manufacturing  and  mining,  n 5,939;  (2)  mercantile, 
74,512;  (3)  miscellaneous,  99,009.  This  request  for  infor- 
mation was  supplemented  by  a  "follow-up"  letter  in  many 
instances,  both  being  on  a  voluntary  basis.  The  replies  num- 
bered only  87,079,  and  a  considerable  proportion  of  these 
showed  the  concerns  addressed  to  be  inactive  or  out  of  busi- 
Even  the  returns   received  were   disappointing,   as  a 


ness. 


great  many  were  incomplete  and  more  were  of  doubtful  ac- 
curacy. In  view  of  these  facts  the  commission  felt  con- 
strained to  withhold  the  issuance  of  the  combined  statements 
originally  planned. 

Further  plans  for  securing  general  corporation  reports  and 
for  compiling  specific  and  current  data  regarding  the  most 
important  industries  were  suspended  on  account  of  the  pres- 
sure of  war  work.  Ahhough  the  war  interfered  with  these 
the  commission  as  a  part  of  its  cost  of  production  war  work 
did  collect  very  complete  and  accurate  reports  from  several 
important  industries.  Monthly  cost  reports  were  obtained  in 
such  basic  industries  as  the  iron  and  steel  industry,  the  petro- 
leum, the  coal,  the  lumber,  and  the  paper  industry.  In  the 
coal  industry  in  19 18,  monthly  reports  giving  complete  in- 
formation were  received  from  nearly  2500  bituminous  opera- 
tors who  mined  between  90  and  95  per  cent  of  the  bituminous 
production  during  that  year,  while  the  reports  from  about 
one  hundred  anthracite  operators  represented  about  99  per 
cent  of  the  total  anthracite  production.  These  reports  and 
also  those  of  the  other  industries  were  discontinued  after 
December,  19 18.  During  the  war  they  had  been  freely  given 
by  all  the  corporations  concerned,  and  indeed  if  they  had  not 
'  been  there  is  no  doubt  that  the  war  powers  of  the  President 
would  have  been  sufficient  to  require  them. 

In  January,  1920,  the  commission  attempted  to  resume  the 
collection  of  monthly  reports  in  the  coal  industry  under  the 
authority  given  it  in  Section  6  of  the  Federal  Trade  Com- 


\i 


•4 


ACTIVITIES 


27 


mission  Act.  The  National  Coal  Association  questioned  the 
authority  of  the  commission,  maintaining  that  the  commission 
was  demanding  information  about  intrastate  commerce  and 
coal  production.  The  Maynard  Coal  Company  sought  and 
obtained  a  temporary  injunction  restraining  the  commission 
from  requiring  such  reports.  The  coal  situation  was  com- 
plicated by  the  fact  that  the  coal  companies  maintained  that 
any  power  the  commission  might  have  under  Section  6  of  the 
Federal  Trade  Commission  Act  had  been  transferred  by  the 
President  under  the  Overman  Act  to  the  Fuel  Administra- 
tion. As  this  complication  was  not  present  in  the  iron  and 
steel  industry  the  commission  decided  to  postpone  the  coal 
case  until  the  question  of  its  powers  to  require  reports  of 
the  cost  of  production  of  commodities  by  corporations  en- 
gaged in  interstate  commerce  could  be  settled  by  a  suit  in 
the  iron  and  steel  industry.  Certain  steel  companies  had  re- 
fused to  make  reports  of  the  cost  of  production  demanded  by 
the  commission  and  had  obtained  a  temporary  injunction. 
Some  corporations  continued  to  make  such  reports  voluntarily 
even  after  the  temporary  injunction  was  granted,  but  not 
enough  to  give  the  commission  the  comprehensive  data  nec- 
essary. Therefore,  it  was  deemed  inadvisable  to  publish  sum- 
maries of  the  data  filed.  The  cases  are  still  pending  in  the 
courts.  * 

Special  Investigations.  Most  important  among  the  eco- 
nomic activities  of  the  commission  are  the  special  investiga- 
tions it  has  conducted.  The  intention  was  that  such  investi- 
gations would  disclose  the  true  economic  facts  in  any  industry, 
and  that  if  the  conditions  showed  that  regulation  was  nec- 
essary it  would  be  obtained  through  the  force  of  public  opin- 
ion or  through  the  action  of  some  other  governmental  agency 
acting  on  the  information  brought  to  light  by  the  investigation. 
Accordingly  the  commission  was  authorized  to  investigate : 

(i)  On   its   own   initiative,    any   corporation   engaged   in 

inter-state  commerce. 

*A  permanent  injunction  has  since  been  granted  by  the  district 
court. 


•^ 


/  ,<.-^' 


.1 


28 


THE  FEDERAL  TRADE  COMMISSION 


n   fi 


I  II    1; 


111  tr 


1 


M 


i  I 


(2)  Upon  the  direction  of  the  President  or  either  house  of 
Congress,  any  corporation  alleged  to  be  violating  the  anti- 
trust acts. 

(3)  On  its  own  initiative  or  on  the  request  of  the  Attorney- 
General,  the  manner  in  which  a  court  decree  dissolving  a  trust 
is  being  carried  out. 

(4)  Upon  the  application  of  the  Attorney-General,  any  cor- 
poration alleged  to  be  violating  the  anti-trust  acts,  and  to  make 
recommendations  for  the  readjustment  of  the  business  in 
order  that  the  corporation  might  retain  its  organization,  man- 
agement, and  conduct  of  business  in  accordance  with  the  law. 

Besides  the  special  investigations  conducted  under  the  above 
powers  the  commission  was  ordered  to  finish  the  investiga- 
tions being  made  by  the  Bureau  of  Corporations  when  it  was 
absorbed  into  the  commission.  Up  to  April  i,  1921,  the  fol- 
lowing investigations  had  been  undertaken  by  the  commis- 


sion: 


Inquiry 


Originating 
Authority 


Form    of 
Report 


Date    of    First 
Volume 


Pipe    Line    Transportation    of    Petro- 
leum         Senate 

Fertilizer    Industry    Senate 

Trade   and   Tariffs  in    So.    America..    President 

Cooperation      in      American      Export 
Trade     Commission 

Beet     Sugar     Bureau    of 

Corpora- 
tions 

Improved   Accounting    Commission 

Industry   Reports    Commission 

Gasoline     Prices     Senate 

Resale  Price  Maintenance   Bureau    of 

Corpora- 
tions 

Trade    Associations    Commission 

Mexican     Sisal     Senate      Com- 
mittee 

Anthracite     Coal     Industry Senate 

Bituminous  Coal  Industry    House 

Newsprint  Paper  Industry   Senate 

Book     Paper     Industry     Senate 

Interlocking    Directorates     Commission 

Prices   of  American   Flags    House 

Meat  Packing   Industry    President 

Grain    Trade    President 

Flour    Industry    President 

Canned  Food  Industries President 

Marketing   and    Storage    President 

Private    Car    Lines    President 

Prices  of  Farm  Implements   Senate 

Copper     Costs     (compilation    of    war 

time  data)    President 

Wyoming    Oil    Industry    Commission 


Printed 

Feb.  28, 

1916 

Printed 

Aug.  19, 

1916 

Printed 

June  30, 

1916 

Printed 

June  30, 

1916 

Printed 

May  24, 

1917 

Printed 

July  1, 

1916 

No  report 

Printed 

April  II, 

1917 

Printed 

June  30, 

1919 

No  report 

Printed 

May  9. 

1916 

Printed 

June  20, 

1917 

Printed 

Tune  20, 

1917 

Printed 

June  13, 

1917 

Printed 

Aug.  21, 

1917 

No    report 

Printed 

July  26, 

1917 

Printed 

July  30, 
Sept.   15, 

1919 

Printed 

1920 

Printed 

April  4, 

1918 

Printed 

May  15, 

1918 

Printed 

June  30, 

1919 

Printed 

June  27, 

1919 

Printed 

May  4f 

1920 

Printed 

June  30, 

1919 

Jan.  3. 

1921 

i 


\ 


ACTIVITIES 


29 


i 


Originating           Form  of              Date  of  First 
Inquiry  Authority  Report Vol"me 

Rag  Trade    (compilation   of  war   time  -n  -       j,  x 

data)      ... President  Pnnted  June  30,  1919 

Milk  Products' industry    Senate  In    Prepara- 

tion 

CoJ  Co,U   (compilation  of  war  time  p^^^.^^_^^  p^._^,^  Jun.  30.  .9.9 

Current  pip^  'siatisUcs   /. Commission  Mimeograph-  Dec^^^j^,. 7 

Current    Coal    Costs    Statistics    Congress  Mimeograph- 

ic    Bulle- 
tins April  20,  1920 

Current  Steel   Costs   Statistics    Congress  No     report 

Combed  Cotton   Yarn   Industry House  In    Prepara- 

tion 

California  Petroleum  Industry Senate  With  p»rinter 

Advance  in  Petroleum   Prices   1920    . .    House     ,  S^nted  /""^/j  IJ!° 

Leather    and    Shoe    Industries    Commission  '!""ted  _  Aug.  21,  1919 

Animal    Feeds    Trade    Senate  With    printer 

Sugar    Supply   and    Prices    House  ^""i^'^  ^°^-  ^^'  ^ 

Fuel  Oil  Costs  and  Prices   President  Conhden- 

tial 

Tobacco  Costs  and  Prices    President  Confiden- 

Milk  Refunds President  Confiden- 

tial 

Southern  Livestock  Prices Senate  S'^"'f?nrt  ^^^'  ^*  '^''° 

Canned    Food    Speculation    Commission  iV"  T^JLz!^r-a 

Lumber  Associations Atty.    General       ^^    ^  repara- 

Canned    Food    Costs    (compilation    of  j^    Prepara- 

war  time  data)    President 

.,     .  ,  tion 

Lumber    Costs     (compilation     of    war  j^    Prepara- 

time   data)    President  ^ion 

With  printer 

Leaf  Tobacco  Prices    House  Printed  Dec.   13.  1920 

Wheat   Prices  in   1920   President 

Meat   Packers   Decree    President    and 

Atty.     Gen- 

-^^^^  In    Prepara- 

Shoe  Industry   House  tion 

Of  these,  twenty-one  originated  with  Congress,  twenty  with 
the  President  and  executive  departments,  and  nine  with  the 
commission  itself.  No  detailed  description  of  the  methods 
of  investigation  can  be  given  to  apply  to  all  the  investigations, 
because  they  vary  so  much.  Not  only  are  the  circumstances 
in  different  industries  so  different  as  to  necessitate  varied 
treatment,  but  the  scope  of  the  investigations  varies  also. 
Some  last  a  few  months  while  others  have  taken  several  years 
for  completion.  Two  general  methods  are  followed  to  secure 
facts.  One  is  by  means  of  schedules  and  questionaires  sup- 
plemented by  the  work  of  accountants  and  agents  in  the  field, 
who  examine  the  records  of  the  corporations  and  compile 
data  from  them.  The  other  is  by  means  of  public  hearings 
where  testimony  is  taken  to  supplement,  correlate,  and  make 


K- 


'. 


30         THE  FEDERAL  TRADE  COMMISSION 

clear  the  facts  recited  in  some  of  the  documentary  evidence. 

Perhaps  the  most  important  and  far-reaching  investigation 
yet  made  by  the  commission  was  that  made  of  foodstuffs. 
On  February  7,  191 7,  the  President  directed  the  commission 
in  cooperation  with  the  Department  of  Agriculture  "to  inves- 
tigate and  report  facts  relating  to  the  production,  ownership, 
manufacture,  storage  and  distribution  of  foodstuffs  ...  to 
ascertain  the  facts  bearing  on  alleged  violations  of  the  anti- 
trust acts,  and  particularly  whether  there  are  manipulations, 
controls,  trusts,  combinations,  conspiracies  or  restraints  of 
trade  out  of  harmony  with  the  law  or  public  interest."  Cong- 
ress made  a  special  appropriation  for  this  purpose.  The  in- 
vestigation covered  primarily  four  branches  of  industry, 
namely,  meat,  flour,  canned  foods,  and  trading  in  grain.  The 
commission  made  extensive  reports  on  each,  that  on  the  meat 
packers  being  in  six  volumes.  In  this  instance,  as  happened 
after  several  other  investigations  of  the  commission,  the  in- 
formation disclosed  led  to  action  on  the  part  of  the  Attorney- 
General  under  the  anti-trust  acts. 

Supervision  of  Export  Trade  Associations.  Among  the 
economic  activities  of  the  commission  is  the  supervision  of 
the  export  trade  associations  formed  under  the  Webb-Pom- 
erene  Act.  So  far  this  work  has  been  relatively  of  minor 
character  but  it  is  growing  in  importance.  Up  to  June  30, 
1921,  forty-eight  associations  comprising  approximately  one 
thousand  concerns  have  taken  advantage  of  the  law  permitting 
them  to  cooperate  for  purposes  of  export  trade.  The  law  re- 
quires each  to  file  with  the  commission  statements  giving 
detailed  information  regarding  the  association.  If  the  com- 
mission believes  that  an  export  trade  association  has  committed 
an  act  or  made  an  agreement  in  restraint  of  trade  within  the 
United  States,  or  which  is  in  restraint  of  the  export  trade  of 
any  domestic  competitor,  or  which  artificially  depresses  prices 
within  the  United  States,  it  must  then  investigate  that  associa- 
tion. If  the  investigation  shows  that  the  law  has  been  violated, 
the  commission  may  recommend  a  readjustment  of  the  bus- 


.'' 


ACTIVITIES 


31 


iness  to  conform  to  the  law.  Where  an  association  fails  to 
comply  with  the  recommendation,  the  commission  is  required 
to  refer  its  findings  and  recommendations  to  the  Attorney 
General  for  such  action  as  he  may  deem  proper. 

Section  4  of  the  Export  Trade  Act  extends  the  general 
prohibition  of  unfair  methods  of  competition  to  the  export 
trade  even  though  the  acts  complained  of  have  been  done 
outside  the  territorial  jurisdiction  of  the  United  States.  The 
Departments  of  State  and  Commerce,  as  well  as  individuals, 
have  lodged  complaints  charging  unfair  practices  in  foreign 
countries  by  commercial  interests  of  this  country  toward  each 
other.  The  basis  of  these  complaints  is  usually  information 
that  has  been  gathered  by  our  consular  service,  and  trans- 
mitted by  the  State  and  Commerce  Departments  to  the  Federal 
Trade  Commission  with  the  request  that  they  be  investigated. 


!!?■ 


i    ': 


CHAPTER  III 

ORGANIZATION 

There  are  three  primary  divisions  of  the  Federal  Trade 
Commission.     They  are: 

1.  Administrative  Division 

2.  Legal  Division 

3.  Economic  Division 

Administrative  Division.  The  Administrative  Division  in- 
cludes all  sections  carrying  on  the  general  business  of  the 
commission  and  the  small  divisions  which  perform  the  minor 
functions. 

Of  the  325  employees  of  the  commission  on  July  i,  192 1, 
129  were  in  this  division.     There  are  fourteen  subdivisions: 

1.  The  commission,  consisting  of  the  five  Commissioners, 
the  Secretary  of  the  commission,  and  a  clerk-secretary  for 
each  Commissioner. 

2.  The  Secretary's  office  consisting  of  six  clerks.  Of  these 
employees  one  is  clerk  to  the  commission  who  with  the  Sec- 
retary attends  all  commission  meetings  and  conferences.  The 
Secretary  is  the  custodian  of  the  minutes,  of  all  confidential 
papers,  and  of  the  seal  of  the  commission;  he  signs  all  orders 
of  the  commission  in  formal  docket  cases  and  intra-office 
orders  to  all  chiefs  of  divisions  and  employees.  The  clerks 
in  this  office  attend  to  the  writing  up  of  minutes,  preparation 
of  answers  to  all  inquiries  from  the  general  public  and  in- 
terested parties  with  reference  to  the  status  of  formal  and 
informal  proceedings.  They  are  also  responsible  for  the  ser- 
vice of  all  formal  complaints  and  orders,  and  for  notices  of 
assignments  of  trial  to  interested  parties  in  formal  proceed- 
ings.    It  is  the  duty  of  this  office  also  to  arrange   for  re- 

32 


11 


ORGANIZATION 


33 


porting  of  all  formal  proceedings  before  the  commission. 
This  office  is  also  responsible  for  certification  of  copies  of 
formal  records  to  the  different  circuit  courts  of  appeal  and 
to  the  United  States  Supreme  Court,  and  of  such  documents 
as  are  requested  by  the  public  or  other  departments  of  the 

government. 

3.  The  Personnel  Section,  in  charge  of  all  matters  relat- 
ing to  appointments,  promotions,  demotions,  transfers, 
changes  in  designation,  and  the  relationship  between  the  com- 
mission and  the  Civil  Service  Commission.  It  is  composed 
of  five  clerks  under  the  special  agent,  who  is  chief  of  the 

section. 

4.  The  Docket  Section,  composed  of  eleven  clerks.  This 
section  is  somewhat  comparable  to  the  office  of  a  clerk  of  a 
court.  All  applications  for  the  issuance  of  complaints  pass 
through  the  section ;  it  files  all  correspondence,  exhibits,  and 
field  and  office  reports  in  connection  with  the  applications.  It 
keeps  the  current  docket  record   for  the   inspection  of   the 

public. 

5.  The  Chief  Clerk's  Office,  in  charge  of  building  and 
quarters,  purchase  of  suppUes  and  equipment,  and  supervi- 
sion of  the  messenger,  mechanical  and  laboring  forces. 
There  are  twenty-eight  employees. 

6.  The  Publications  Section,  in  charge  of  all  matters  hav- 
ing connection  with  the  Public  Printer  and  the  Superinten- 
dent of  Documents.  In  this  section  are  handled  the  distri- 
bution of  publications,  maintenance  of  mailing  lists,  prepara- 
tion of  multigraph,  mimeograph  and  photostat  duplication 
work,  and  all  of  the  clerical  work  necessary  in  keeping  the 
records  of  this  branch  of  the  commission's  activities.  There 
are  eighteen  employees  in  this  section. 

7.  The  Disbursing  Office,  consisting  of  seven  employees 
under  the  auditor  and  having  charge  of  the  fiscal  affairs. 

8.  The  Stenographic  Section,  composed  of  thirteen  em- 
ployees who  do  the  stenographic  and  typewriting  work  for  all 
the  force.  '    . 


%  .i'"" 


34 


THE  FEDERAL  TRADE  COMMISSION 


9.  The  Library.  Four  persons  are  engaged  in  taking  care 
of  the  library,  which  consists  of  economic  and  legal  volumes 
and  of  corporation  reports,  association  records,  current  finan- 
cial and  statistical  service  publications,  newspapers,  financial 
and  trade  journals,  catalogues,  trade  lists  and  addresses. 
Much  of  this  material  is  confidential. 

10.  The  Mail  and  Files  Section,  where  the  receipt  and 
distribution  of  the  mail  takes  place  and  where  all  the  papers 
and  records  of  the  commission  except  those  of  the  docket  sec- 
tion are  finally  received  and  cared  for.  There  are  ten  clerks  in 
this  section. 

11.  The  Hospital,  under  a  graduate  nurse. 

12.  The  Board  of  Review,  composed  of  a  special  exam- 
iner and  two  attorneys  with  two  clerks. 

13.  The  Patents  and  Trading-with-the-Enemy  Section, 
consisting  of  two  clerks  who  continue  the  war  work  the  com- 
mission  is  still  called  upon  to  do  under  the  Trading-with- 
the-Enemy  Act. 

14.  Research  and  Foreign  Trade  Section,  composed  of  four 
employees  who  have  charge  of  the  commission's  work  under 
the  Export  Trade  Act. 

Legal  Division.  Of  the  three  hundred  and  twenty-five  em- 
ployees of  the  commission  on  July  i,  1921,  sixty-nine  were 
in  the  Legal  Division.  The  three  branch  offices  are  main- 
tained by  this  division  which  is  divided  into  two  subdivisions, 
or  branches.     They  are: 

The  Investigational  Branch.  The  duty  of  this  branch  of  the 
Legal  Division  is  to  conduct  all  the  investigations  in  connec- 
tion with  applications  for  the  issuance  of  complaints  and  to 
gather  evidence  in  preparation  of  formal  cases  for  trial.  It 
also  furnishes  the  examiners  who  sit  at  the  trial  of  formal 
cases.  Including  the  clerical  help  there  are  eighteen  employ- 
ees under  the  Chief  Examiner  who  is  also  an  attorney. 

The  Trial  Branch.  This  branch  is  composed  of  the  law- 
yers  and   examiners   who   represent   the  commission   in   all 


ORGANIZATION 


35 


formal  proceedings  before  the  commission  and  in  all  cases 
in  the  courts.  There  are  twenty-eight  persons  under  the  Chief 
Counsel,  who  is  the  chief  legal  adviser  to  the  commission. 

The  Branch  Offices.  The  commission  maintains  three 
branch  offices,  each  under  an  attorney  examiner.  The  New 
York  and  Chicago  offices  each  have  nine  employees  and  the 
San  Francisco  office  has  three. 

Economic  Division.  The  Economic  Division  has  no  fixed 
organization.  It  has  to  adapt  itself  to  the  investigations 
being  conducted,  and  as  these  are  finished  and  new  ones  are 
begun,  the  organization  varies  repeatedly.  The  division  is 
under  the  Chief  Economist.  On  July  i,  192 1,  there  were 
one  hundred  and  twenty-seven  employees  in  this  division. 

Personnel  and  Offices.  Up  to  the  present  eleven  men  have 
served  as  commissioners.  They  are  George  Rublee  (tem- 
porary because  his  nomination  was  not  confirmed  by  the  Sen- 
ate), Edward  N.  Hurley  (resigned),  Will  H.  Parry  (died), 
Joseph  E.  Davies  (resigned),  John  Franklin  Fort  (resigned), 
William  J.  Harris  (resigned),  William  B.  Colver  (term  ex- 
pired), John  Garland  Pollard  (term  expired),  and  the  pres- 
ent commissioners,  Victor  Murdock,  Huston  Thompson, 
Nelson  B.  Gaskill  and  John  F.  Nugent.  The  number  of  em- 
ployees of  the  commission  has  varied  as  follows : 


March  16,  1915  (date  of  organization) 

144 

June  30,  1916 

224 

1917 

193 

"     1918 

640 

1919 

367 

"     1920 

418 

"     1921 

315 

The  headquarters  of  the  Federal  Trade  Commission  are 
located  in  one  of  the  Temporary  office  buildings  constructed 
during  the  war  at  2000  D.  St.  N.  W.  Washington,  D.  C.  In 
order  to  decrease  the  expense  incident  to  the  investigation  of 
applications  for  complaints  and  to  the  preparation  of  the  va- 


i^i 


■if 


36         THE  FEDERAL  TRADE  COMMISSION 

rious  proceedings  for  hearings,  the  commission  in  June,  1918, 
estabhshed  branch  offices  in  New  York  City,  Chicago,  and 
San  Francisco,  all  of  which  are  still  maintained. 


\) 


APPENDIX  I 


OUTLINE  OF  ORGANIZATION 


Explanatory  Note 


The  Outlines  of  Organization  have  for  their  purpose  to 
make  known  in  detail  the  organization  and  personnel  pos- 
sessed by  the  several  services  of  the  National  Government  to 
which  they  relate.  They  have  been  prepared  in  accordance 
with  the  plan  followed  by  the  President's  Commission  on 
Economy  and  Efficiency  in  the  preparation  of  its  outlines  of 
the  organization  of  the  United  States  Government.^  They 
differ  from  those  outlines,  however,  in  that  whereas  the  com- 
mission's report  showed  only  organization  units,  the  pres- 
entation herein  has  been  carried  far  enough  to  show  the  ser- 
sonnel  embraced  in  each  organization  unit. 

These  outlines  are  of  value  not  merely  as  an  effective  means 
of  making  known  the  organization  of  the  several  services. 
If  kept  revised  to  date  by  the  services,  they  constitute  ex- 
ceedingly important  tools  of  administration.  They  permit 
the  directing  personnel  to  see  at  a  glance  the  organization  and 
personnel  at  their  disposition.  They  establish  definitely  the 
line  of  administrative  authority  and  enable  each  employee  to 
know  his  place  in  the  system.  They  furnish  the  essential 
basis  for  making  plans  for  determining  costs  by  organization 
division  and  subdivision.  They  afford  the  data  for  a  con- 
sideration of  the  problem  of  classifying  and  standardizing 
personnel  and  compensation.  Collectively,  they  make  it  pos- 
sible to  determine  the  number  and  location  of  organization 
divisions  of  any  particular  kind,  as  for  example,  laboratories, 

^  House  Doc.  458,  626.  Congress,  2nd  Session,   1912 — 2  vols. 

37  \ 


Y 

II 


38         THE  FEDERAL  TRADE  COMMISSION 

libraries,  blue-print  rooms,  or  any  other  kind  of  plant  pos- 
sessed by  the  National  Government,  to  what  services  they  are 
attached  and  where  they  are  located,  or  to  determine  what  ser- 
vices are  maintaining  stations  at  any  city  or  point  in  the 
United  States.  The  Institute  hopes  that  upon  the  completion 
of  the  present  series,  it  will  be  able  to  prepare  a  complete 
classified  statement  of  the  technical  and  other  facilities  at 
the  disposal  of  the  Government.  The  present  monographs 
will  then  furnish  the  details  regarding  the  organization, 
equipment,  and  work  of  the  institutions  so  listed  and  clas- 
sified. 


it 

;i   1 


I" 


OUTLINE  OF  ORGANIZATION 


FEDERAL  TRADE  COMMISSION 


July  I,  192 1 


Organisation  Units; 

Classes  of  Employees 

I.  ADMINISTRATIVE  DIVISION 

1.  The  Commission 
Commissioner 
Secretary 
Clerk  to   Commissioner 

2.  SECRETARY'S  OFFICE 
Special   Agent    (Assistant   Secretary) 
Clerk  (Clerk  to  Commission) 
Clerk 


Number 


3.  PERSONNEL  SECTION 

Special  Agent   (chief  of   section) 
Clerk 


4.  DOCKET  SECTION 
Clerk   (chief  of  section) 
Clerk 

Examiner  (temp) 
Clerk 


5.  CHIEF  CLERK'S  OFFICE 
Chief  Clerk 
Clerk 


Annual 

Salary 

Rate^ 


$10,000 
5,000 
1,800 
1,600 

4,500 
3,000 

1,800 

1,600 

1,500 

1,400 

1,200 

3»300 
1,920 
1,740 
1,500 
1,320 

3,000 
2,100 
1,500 
1,400 
1,320 
1,200 

3,250 
2,100 
1,440 
2  1,320 

2  Net,  or  without  the  temporary  "bonus"  or  additional  compensa- 
tion of  60  per  cent  on  classes  below  $400,  of  $240  on  classes  of  $400 
to  $2500,  and  of  an  amount  necessary  to  make  the  total  compensa- 
tion $2740  on  classes  of  $2500  to  $2740.  This  is  subject  to  minor 
exceptions  in  special  cases. 

39 


»i 


V 


( 


^ip^.. 


40 


THE  FEDERAL  TRADE  COMMISSION 


\  ' 


General  Mechanic 
Laborer 
Messenger 
Telephone  Operator 
Messenger 
Assistant  Messenger 

Messenger  Boy 

Skilled  Laborer 

Laborer 

Telephone  Operator 

Assistant  Messenger 

Laborer 

Messenger  Boy 
6.  PUBLICATIONS  SECTION 

Clerk   (chief  of  section) 

Clerk 

Multigraph  Operator 

Clerk 


Multigraph  Operator 
7.  DISBURSING  OFFICE 
Special  Agent  (Auditor  and  chief  of 

section) 
Disbursing  Clerk 
Special  Agent 
Clerk 


8.  STENOGRAPHIC  SECTION 
Clerk     (chief  of  section) 
Clerk 


9.  LIBRARY 

Examiner    (chief   of   section) 
Clerk 

10.  MAIL  and  FILES  SECTION 
Clerk   (chief  of  section) 
Clerk 


I 

1,260 

I 

1,200 

I 

1,060 

I 

900 

I 

900 

7 

900 

I 
I 
I 

900 
780 
780 

I 

720 

I 
I 

720 
600 

6 

480 

I 

3,000 

I 

2,000 

\ 

1,800 

I 

1,520 

I 

1,400 

2 

1,200 

I 

1,200 

I 

I 

3,600 

2,880 

I 

2,000 

I 
I 

1,800 
1,560 

I 

1,440 

2 

1,200 

I 

2,520 

I 

1,440 

2 

4 

I 

1,400 

1,380 
1,260 

4 

1,200 

I 
I 

2,500 
1,800 

I 

1,380 

I 

1,200 

I 

2,880 

I 

1,800 

4 

1,320 

2 

1,200 

I 

1,140 

I 

900 

OUTLINE  OF  ORGANIZATION 


11.  HOSPITAL 
Special  Expert 

12.  BOARD  OF  REVIEW 

Special    Examiner    (chief    of    division) 
Special  Attorney 
Attorney  and  Examiner 
Clerk 


I 
I 
I 
I 

I 


I 
I 


13.  PATENTS  and  T.  W.  T.  E.  SECTION 
Clerk  (chief  of  division) 
Clerk 

14.  RESEARCH  and  FOREIGN  TRADE  SECTION 
Special   Agent    (chief   of   division)  i 

Examiner  ^ 

I 

Clerk  I 
2.  LEGAL  DIVISION 
I.  TRIAL  BRANCH 

Attorney  and  Examiner   (Chief  Counsel)  i 

Special  Attorney  I 

Attorney  and   Examiner  2 

2 

8 
I 
I 
I 
I 


Special  Attorney 
Attorney  and  Examiner 

Examiner 

Attorney  and  Examiner 

Special  Attorney 

Examiner 

Special  Attorney 

Examiner 

Special   Agent 
Clerk 


I 
I 
I 
I 
I 
I 
I 
I 
I 
I 


INVESTIGATIONAL  BRANCH 
Attorney  and  Examiner  (Chief  Examiner)  i 
Special   Attorney  ^ 

Attorney   and   Examiner  2 

4 
Examiner 

Attorney  and  Examiner 
Special  Attorney 
Examiner 


41 


1,320 

5,000 
5,000 
3,800 
1,680 
1,500 

2,000 
1,400 

4,000 
2,740 
1,640 
1,400 


8,000 
5,000 
5,000 
4,500 
4,200 
4,000 
3,800 
3,600 
3,600 
3,500 
3,500 
3'300 
3,200 
3,200 
3,000 
3,000 
2,940 
2,400 
'  2,000 
1,800 

5,000 
3,600 
3,600 

3,300 
3,000 
3,000 
2,460 
2,280 
1,920 
1,800 


I 


h  f 


42         THE  FEDERAL  TRADE  COMMISSION 


Qerk 

Examiner 
3.  NEW  YORK  OFFICE 
Attorney    and    Examiner    (In   Charge) 


Examiner 
Clerk 

4.  CHICAGO  OFFICE 

Attorney  and  Examiner   (In  Charge) 

Examiner 

Attorney  and  Examiner 

Examiner 

Clerk 

5.  SAN  FRANCISCO  OFFICE 
Attorney   and   Examiner    (In   Charge) 
Examiner 

Clerk 

3.  ECONOMIC  DIVISION 

Special  Examiner  (Chief  Economist  and 

Chief  of  Division) 
Special    Expert 
Special    Examiner 
Examiner 
Special   Agent 
Examiner 


Special   Agent 
Examiner 
Special  Agent 

Special   Examiner 
Special  Expert 
Examiner 

Special  Agent 


Examiner 


I 

1,500 

I 

1,320 

I 

1,200 

I 

2,280 

I 

4,200 

I 

3.300 

I 

2,820 

I 

2,700 

I 

2,400 

I 

1,920 

I 

1,620 

2 

1,200 

I 

4,200 

I 

2,880 

I 

2,820 

I 

2,820 

I 

2,460 

I 

2,280 

2 

1,320 

I 

1,200 

I 

3,600 

I 

2,640 

I 

1,320 

I 

7,500 

I 

6,000 

I 

6,000 

2 

5,000 

I 

4,800 

I 

4,800 

I 

4,500 

I 

3,600 

I 

3,500 

a 

3,300 

I 

3,300 

I 

3,100 

2 

3,000 

2 

3,000 

I 

3,000 

4 

3,000 

I 

2,880 

I 

2,820 

I 

2,800 

3 

2,500 

I 

2,500 

m 

OUTLINE  OF  ORGANIZATION 

43 

Clerk 

I 

2,500 

\ 

Special   Agent 
Examiner 

3 
,3 

2,400 
2,400 

I 

2,340 

Special  Agent 

i 

2,280 

2t,250 

Clerk 

I 

2,220 

Examiner 

2 

2,160 

Special  Agent 
Special  Expert 
Special    Agent 
Examiner 

I 
I 

2 

3 

2,100 
2,000 
2,000 
2,000 

Clerk 

2 

2,000 

Examiner 

I 

1,920 

Clerk 

Special  Agent 
Examiner 
Clerk 

Examiner 

Clerk 

Examiner 

Clerk 

Examiner 

Clerk 

Examiner 

Qerk 


Examiner 

Draftsman 

Clerk 


I 
I 
6 

4 
I 

3 

3 
I 

3 

7 

3 

7 
I 

10 

7 
I 

I 

I 

9 


1,860 
1,800 
1,800 
1,800 

1,740 
1,680 
1,680 
1,600 
1,500 
1,500 
1,440 
1,440 
1,380 
1,380 
1,320 
1,260 
1,200 
1,200 
1,200 


APPENDIX  2 


CLASSIFICATION  OF  ACTIVITIES 


Explanatory  Note 


\[ 


The  Classifications  of  Activities  have  for  their  purpose  to 
list  and  classify  in  all  practicable  detail  the  specific  activities 
engaged  in  by  the  several  services  of  the  National  Govern- 
ment.    Such   statements   are    of    value    from   a   number   of 
standpoints.     They  furnish,  in  the  first  place,  the  most  effec- 
tive showing  that  can  be  made  in  brief  compass  of  the  char- 
acter of  the  work  performed  by  the  service  to  which  they 
relate.     Secondly,  they  lay  the  basis  for  a  system  of  account- 
ing and  reporting  that  will  permit  the  showing  of  total  ex- 
penditures classified  according  to  activities.     Finally,   taken 
collectively,  they  make  possible  the  preparation  of  a  general 
or  consolidated  statement  of  the  activities  of  the  Government 
as  a  whole.     Such  a  statement  will  reveal  in  detail,  not  only 
what  the  Government  is  doing,  but  the  services  in  which  the 
work  is  being  performed.     For  example,  one  class  of  activ- 
ities that  would  probably  appear  in  such  a  classification  is 
that   of   "scientific   research.'*     A   subhead   under   this   class 
would  be  "chemical  research."     Under  this  head  would  ap- 
pear the  specific  lines  of  investigation  under  way  and  the 
services  in  which  they  were  being  prosecuted.     It  is  hardly 
necessary  to  point  out  the  value  of  such  information  in  plan- 
ning for  future  work  and  in  considering  the  problem  of  the 
better  distribution  and  coordination  of  the  work  of  the  Gov- 
ernment.    The  Institute  contemplates  attempting  such  a  gen- 
eral listing  and  classification  of  the  activities  of  the  Govern- 
ment upon  the  completion  of  the  present  series. 

.44 


CLASSIFICATION  OF  ACTIVITIES 


45 


CLASSIFICATION    OF    ACTIVITIES 

1.  Quasi-judicial 

1.  Prevention  of  unfair  methods  of  competition 
(a)   Trade  practice  submittals 

2.  Acting  as  master  in  chancery  in  anti-trust  cases 
when  so  designated  by  the  court.  (So  far  the  com- 
mission has  not  been  called  upon  to  perform  this  duty.) 

2.  Economic 

1.  Collection  of  current  reports  from  corporations  en- 
gaged in  interstate  commerce. 

2.  Investigation,  on  its  own  initiative,  of  any  corpora- 
tion engaged  in  interstate  commerce. 

3.  Investigation,  upon  direction  of  the  President  or 
either  house  of  Congress,  of  any  corporation  alleged  to 
be  violating  the  anti-trust  acts. 

4.  Investigation,  either  on  its  own  initiative  or  on 
the  request  of  the  Attorney  General,  of  the  manner  in 
which  a  court  decree  dissolving  a  trust  is  being  carried 

out. 

5.  Investigation  upon  the  application  of  the  Attor- 
ney General  of  any  corporation  alleged  to  be  violating 
the  anti-trust  acts  and  recommendation  of  the  readjust- 
ment of  the  business  in  order  that  the  corporation  may 
maintain  its  organization,  management,  and  conduct  of 
business  in  accordance  with  law. 

6.  Publication  of  such  information  collected  as 
deemed  to  be  in  the  public  interest  and  using  it  as  a 
basis  for  recommending  legislation  to  Congress. 

7.  Supervision  of  export  trade  associations  formed 
under  he  provisions  of  the  Webb-Pomerene  Act. 


i  I 


APPENDIX  3 

PUBLICATIONS 

Annual  Reports.  The  Federal  Trade  Commission  is  re- 
quired by  law  to  submit  to  Congress  an  annual  report  cover- 
ing the  work  done  during  the  fiscal  year.  These  reports  con- 
tain not  only  administrative  details  but  also  much  material  of 
general  interest.  Of  particular  importance  is  the  list  of  all 
the  formal  complaints  issued,  with  a  brief  description  of  each 
giving  the  names  of  the  parties  complained  of,  the  charges 
and  the  status  of  the  complaint. 

Reports  of  Economic  Investigation.  The  following  list 
contains  all  the  reports  of  economic  investigations  that  had 
been  printed  up  to  April  i,  1921.  They  afford  an  insight 
into  the  economic  conditions  in  many  fields  of  activity.  It  is 
possible  to  purchase  these  publications  from  the  Superin- 
tendent of  Documents,  Government  Printing  Office,  Wash- 
ington, D.  C. 


Report 

Anthracite  and  Bituminous  Coal 

Beet  Sugar  Industry 

Book  Paper  Industry 

Canned  Vegetables  and  Fruits 

Canned  Salmon 

Coal,  No.  I.     Pennsylvania  Bituminous 

2.  Pennsylvania  Anthracite 

3.  Illinois  Bituminous 

4.  Alabama,  Tennessee  &  Kentucky 
Bituminous 

5.  Ohio,  Indiana  and  Michigan 

6.  Maryland,  West  Virginia  &  Virginia 

7.  Trans-Mississippi   States 
Cooperation  on  American  Export  Trade 
Copper  Costs 

Commercial  Wheat  Flour  Milling 
Causes  of  High  Prices  of  Farm  Implements 

46 


Dated 


« 


tt 


*t 


tt 


tt 


tt 


tt 


tt 


tt 


tt 


tt 


June 
May 
August 
May 
Dec. 

30, 
24, 
21, 

1917 
1917 
1917 
1918 
1918 

June 

tt 

30, 

1919 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

tt 

June 

30» 

1916 

June  30, 

Sept.  15, 

May  4, 

1919 
1920 
1920 

PUBLICATIONS 


47 
Dated 


August  19,  1916 

April  4,  1918 

July  I,  1916 

Sept.  15,  1920 


<( 


(( 


tt 


tt 


tt 


tt 


Aug.  21,  1919 


(( 


tt 


tt 


It 


tt 


2. 
3- 

4- 


Report 

Fertilizer  Industry 
Flour  Milling  and  Jobbing 

Fundamentals  of  a  Cost  System  for  Manufacturers 
Grain  Trade  Vol.  i.  Country  Grain  Marketing 
"  "  "     2.  Terminal  Grain  Markets  and 

Exchanges 
**         "         "    3.  Future  Trading  Operations 
Leather  and  Shoe  Industry 
Maximum  Profit  Limitation  on  Meat  Packing  Industry  Sept.  25,  1919 
Meat  Packing  Industry 
Part  I.     Extent  and  Growth  of  Power  of  the 

Five  Packers  in  Meat  and  Other  In- 
dustries 
Evidence  of  Combination  among  Packers 
Methods  of  the  Five  Packers  in  Control- 
ling the  Meat  Packing  Industry 
The  Five  Larger  Packers  in  Produce  and 
Grocery  Foods 

5.  Profits  of  the  Packers 

6.  Growing,   Fattening  and  Marketing  of 
Livestock 

Newsprint  Paper  Industry 

Petroleum  Industry  of  Wyoming 

Advances  in  Prices  of  Petroleum  Products 

Pipe  Line  Transportation  of  Petroleum 

Price  of  Gasoline  in  191 5 

Prices  of  American  Flags 

Private  Car  Lines 

Southern  Livestock  Prices 

Sugar  Supply  and  Prices 

System  of  Accounts  for  Retail  Merchants 

Resale  Price  of  Maintenance 

Trade  and  Tariffs  in  South  America 

Wheat  Prices  in  1920 

Wholesale   Marketing  of   Foods 

Woolen  Rag  Trade 

Commercial  Bribery 

Other  Publications.     Findings,  Orders  and  Conference  Rul- 
ings of  April    15,    1920,   Federal  Trade  Commission,   Vol. 

I. 

Findings  and  Orders  of  Federal  Trade,  June  30,  1920, 
Commission,  Vol  II. 

Discussion  of  and  Practice  and  Procedure  under  the  Ex- 
port Trade  Act. 

Extracts  from  the  Trading  with  the  Enemy  Act  and  Exec- 
utive Order  of  October  12,  19 17. 


June  24, 

1919 

Nov.  25, 

1918 

June  28, 

1919 

June  30, 

1919 

June  28, 

1919 

June  30, 

1919 

June  13, 

1917 

Jan.  3, 

1921 

June  I, 

1920 

Feb.  28, 

1916 

Apr.  II, 

1917 

July  26, 

1917 

March  26, 

1920 

Feb.  2, 

1920 

Nov.  15, 

1920 

July  I, 

1916 

June  30, 

1919 

June  30, 

1916 

Dec.  13, 

1920 

June  30, 

1919 

June  30, 

1919 

March  18, 

1920 

I 


I 


APPENDIX  4 
LAWS 

(A)  Index  to  Laws 

Creation 

Federal    Trade    Commission   established  38  Stat.  L.,  717,  Sec.  i. 

Bureau  of  Corporations  abolished   38  Stat.  L.,  717,  Sec.  3. 

Personnel 

Positions   established 

Commissioners   38  Stat.  L.,  717,  Sec.  i. 

Secretary 38  Stat.  L.,  717,  Sec.  2. 

Method  of  appointment  of 

Commissioners   38  Stat.  L.,  717,  Sec.  i. 

Secretary 38  Stat.  L.,  717,  Sec.  2. 

Attorney,  special  experts  and  examiner  38  Stat.  L.,  717,  Sec.  2. 

All    other    employees 38  Stat.  L.,  717,  Sec.  2. 

Salaries  of 

Commissioners  38  Stat.  L.,  717,  Sec.  2. 

Secretary 38  Stat.  L.,  717,  Sec.  i. 

Activities 

Quasi-judicial 

Unfair  methods  of  competition    38  Stat.  L.,  717,  Sec.  5. 

Price    discriminations    38  Stat.  L.,  730,  Sec.  2. 

Tying  contracts    38  Stat.  L.,  730,  Sec.  3. 

Holding-  companies  38  Stat.  L.,  730,  Sec.  7. 

Interlocking  directorates    38  Stat.  L.,  730,  Sec.  8. 

Master  in  Chancery 38  Stat.  L.,  717,  Sec.  7. 

Economic 

Corporation  reports   38  Stat.  L.,  717,  Sec.  6. 

Special  investigations    38  Stat.  L.,  717,  Sec.  6. 

Supervision  of  Export   Trade  Assoc's  40   Stat.    L.,   516, 

Sec.  4,  5. 
Itents  \of  Appropriation 
Salaries 

Commissioners   41    Stat.  L.,   1380 

Secretary 41    Stat.  L.,   1380 

All  other  expenses   41    Stat.  L.,   1380 

(B)  Compilation  of  Laws 

19 1 4 — Act  of  September  26,  1914  (38  Stat.  L.,  717) — An 
Act  To  create  a  Federal  Trade  Commission,  to  de- 
fine its  powers  and  duties,  and  for  other  purposes. 

48 


LAWS 


49 


[Sec  I.]  That  a  commission  is  hereby  created  and  established, 
to  be  known  as  the  Federal  Trade  Commission  (hereinafter  re- 
ferred to  as  the  commission),  which  shall  be  composed  of  five 
commissioners,  who  shall  be  appointed  by  the  President,  by  and 
with  the  advice  and  consent  of  the  Senate.  Not  more  than  three 
of  the  commissioners  shall  be  members  of  the  same  political  party. 
The  first  commissioners  appointed  shall  continue  in  office  for  terms 
of  three,  four,  five,  six  and  seven  years,  respectively,  from  the 
date  of  the  taking  effect  of  this  act,  the  term  of  each  to  be  desig- 
nated by  the  President,  but  their  successors  shall  be  appointed 
for  terms  of  seven  years,  except  that  any  person  chosen  to  fill  a 
vacancy  shall  be  appointed  only  for  the  unexpired  term  of  the  com- 
missioner whom  he  shall  succeed.  The  commission  shall  choose 
a  chairman  from  its  own  membership.  No  commissioner  shall  en- 
gage in  any  other  business,  vocation,  or  employment.  Any  commis- 
sioner may  be  removed  by  the  President  for  inefficiency,  neglect  of 
duty,  or  malfeasance  in  office.  A  vacancy  in  the  commission  shall 
not  impair  the  right  of  the  remaining  commissioners  to  exercise  all 
the  powers  of  the  commission. 

The  Commission  shall  have  an  official  seal,  which  shall  be  judi- 
cially noticed. 

Sec.  2.  That  each  commissioner  shall  receive  a  salary  of  $10,000 
a  year,  payable  in  the  same  manner  as  the  salaries  of  the  judges 
of  the  courts  of  the  United  States.  The  Commission  shall  appoint 
a  secretary,  who  shall  receive  a  salary  of  $5,000  a  year,  payable  in 
like  manner,  and  it  shall  have  authority  to  employ  and  fix  the  com- 
pensation of  such  attorneys,  special  experts,  examiners,  clerks,  and 
other  employees,  as  it  may  from  time  to  time  find  necessary  for 
the  proper  performance  of  its  duties  and  as  may  be  from  time  to 
time  appropriated  for  by  Congress. 

With  the  exception  of  the  secretary,  a  clerk  to  each  commis- 
sioner, the  attorneys,  and  such  special  experts  and  examiners  as  the 
Commission  may  from  time  to  time  find  necessary  for  the  conduct 
of  its  work,  all  employees  of  the  Commission  shall  be  a  part  of  the 
classified  civil  service,  and  shall  enter  the  service  under  such  rules 
and  regulations  as  may  be  prescribed  by  the  Commission  and  by 
the  Civil  Service  Commission. 

All  of  the  expenses  of  the  Commission,  including  all  necessary 
expenses  for  transportation  incurred  by  the  commissioners  or  by 
their  employees  under  their  orders  in  making  any  investigation,  or 
upon  official  business  in  any  other  places  than  in  the  city  of  Wash- 
ington, shall  be  allowed  and  paid  on  the  presentation  of  itemized 
vouchers  therefor  approved  by  the  Commission. 

Until  otherwise  provided  by  law,  the  Commission  may  rent  suit- 
able offices  for  its  use. 

The  Auditor  for  the  State  and  Other  Departments  shall  receive 
and  examine  all  accounts  of  expenditures  of  the  Commission. 

Sec  3  That  upon  the  organization  of  the  Commission  and  elec- 
tion of  its  chairman,  the  Bureau  of   Corporations   and  the  offices 


so         THE  FEDERAL  TRADE  COMMISSION 

of  the  Commissioner  and  Deputy  Commissioner  of  Corporations 
shall  cease  to  exist;  and  all  pending  investigations  and  proceed- 
ings of  the  Bureau  of  Corporations  shall  be  continued  by  the  Com- 
mission. 

All  clerks  and  employees  of  the  said  bureau  shall  be  transferred 
to  and  become  clerks  and  employees  of  the  commission  at  their 
present  grades  and  salaries.  All  records,  papers,  and  property  of 
the  said  bureau  shall  become  records,  papers,  and  property  of  the 
commission,  and  all  unexpended  funds  and  appropriations  for  the 
use  and  maintenance  of  the  said  bureau,  including  any  allotment 
already  made  to  it  by  the  Secretary  of  Commerce  from  the  contin- 
gent appropriation  for  the  Department  of  Commerce  for  the  fiscal 
year  nineteen  hundred  and  fifteen,  or  from  the  departmental  print- 
ing fund  for  the  fiscal  year  nineteen  hundred  and  fifteen,  shall  be- 
come funds  and  appropriations  available  to  be  expended  by  the 
commission  in  the  exercise  of  the  powers,  authority,  and  duties 
conferred  on  it  by  this  act. 

The  principal  office  of  the  commission  shall  be  in  the  city  of 
Washington,  but  it  may  meet  and  exercise  all  its  powers  at  any 
other  place.  The  commission  may,  by  one  or  more  of  its  members, 
or  by  such  examiners  as  it  may  designate,  prosecute  any  inquiry 
necessary  to  its  duties  in  any  part  of  the  United  States. 

Sec.  4.  That  the  words  defined  in  this  section  shall  have  the 
following  meaning  when  found  in  this  act,  to  wit: 

"Commerce"  means  commerce  among  the  several  States  or  with 
foreign  nations,  or  in  any  Territory  of  the  United  States  or  in  the 
District  of  Columbia,  or  between  any  such  Territory  and  another, 
or  between  any  such  Territory  and  any  State  or  foreign  nation,  or  be- 
tween the  District  of  Columbia  and  any  State  or  Territory  or  foreign 
nation. 

"Corporation"  means  any  company  or  association  incorporated 
or  unmcdrpoTated,  which  is  organized  to  carry  on  business  for 
profit  and  has  shares  of  capital  or  capital  stock,  and  any  company 
or  association,  incorporated,  or  unincorporated,  without  shares  of 
capital  or  capital  stock,  except  partnerships,  which  is  organized  to 
carry  on  business  for  its  own  profit  or  that  of  its  members. 

"Documentary  evidence"  means  all  documents,  papers,  and  cor- 
respondence in  existence  at  and  after  the  passage  of  this  act. 

"Acts  to  regulate  commerce"  means  the  act  entitled  "An  act  to 
regulate  commerce,"  approved  February  fourteenth,  eighteen  hun- 
dred and  eighty-seven,  and  all  acts  amendatory  thereof  and  supple- 
mentary thereto. 

"Antitrusts  act_s"  means  the  act  entitled  "An  act  to  protect  trade 
and  commerce  against  unlawful  restraints  and  monopolies,"  ap- 
proved July  second,  eighteen  hundred  and  ninety;  also  the  sections 
seventy-three  to  seventy-seven,  inclusive,  of  an  act  entitled  "An  act 
to  reduce  taxation,  to  provide  revenue  for  the  Government,  and 
for  other  purposes,"  approved  August  twenty-seventh,  eighteen  hun- 
dred and  ninety- four;  and  also  the  act  entitled  "An  act  to  amend 
sections  seventy-three  and  seventy-six  of  the  act  of  August  twenty- 
seventh,  eighteen  hundred  and  ninety-four,  entitled  'An  act  to  re- 


I'wi     ■  HI .111. 


LAWS 


51 


duce  taxation,  to  provide  revenue  for  the  Government,  and  for 
other  purposes,' "  approved  February  twelfth,  nineteen  hundred  and 
thirteen. 

Sec.  5.  That  unfair  methods  of  competition  in  commerce  are| 
hereby  delared  unlawful. 

The  commission  is  hereby  empowered  and  directed  to  prevent  per-% 
sons,  partnerships,  or  corporation,  except  banks,  and  common  carriers! 
subject  to  the  acts  to  regulate  commerce,  from  using  unfair  methods! 
of  competition  in  commerce. 

Whenever  the  commission  shall  have  reason  to  believe  that  any 
-such  person,  partnership,  or  corporation  has  been  or  is  using  any 
unfair  method  of  competition  in  commerce,  and  if  it  shall  appear 
to  the  commission  that  a  proceeding  by  it  in  respect  thereof  would 
/be  to  the  interest  of  the  public,  it  shall  issue  and  serve  upon  such 
I  person,  partnership,  or  corporation  a  complaint  stating  its  charges 
\  in  that  respect,  and  containing  a  notice  of  a  hearing  upon  a  day  and 
!  at  a  place  therein  fixed  at  least  thirty  days  after  the  service  of  said 
complaint.  The  person,  partnership,  or  corporation  so  complained 
of  shall  have  the  right  to  appear  at  the  place  and  time  so  fixed  and 
show  cause  why  an  order  should  not  be  entered  by  the  commission 
requiring  such  person,  partnership,  or  corporation  to  cease  and 
desist  from  the  violation  of  the  law  so  charged  in  said  complaint, 
Any  person,  partnership,  or  corporation  may  make  application,  and 
upon  good  cause  shown  may  be  allowed  by  the  commission,  to  inter- 
vene and  appear  in  said  proceeding  by  counsel  or  in  person.  The 
testimony  in  such  proceeding  shall  be  reduced  to  writing  and  filed 
in  the  office  of  the  commission.  If  upon  such  hearing  the  com- 
mission shall  be  of  the  opinion  that  the  method  of  competition  in 
question  is  prohibited  by  this  act,  it  shall  make  a  report  in  writing  in 
which  it  shall  state  its  findings  as  to  the  facts,  and  shall  issue 
and  cause  to  be  served  on  such  person,  partnership,  or  corporation  an 
order  requiring  such  person,  partnership,  or  corporation  to  cease  and 
desist  from  using  such  method  of  competition.  Until  a  transcript 
of  the  record  in  such  hearing  shall  have  been  filed  in  a  circuit  court 
of  appeals  of  the  United  States  as  hereinafter  provided,  the  com- 
mission may  at  any  time,  upon  such  notice  and  in  such  manner 
as  it  shall  deem  proper,  modify  or  set  aside,  in  whole  or  in  part, 
any  report  or  any  order  made  or  issued  by  it  under  this  section. 

If  such  person,  partnership,  or  corporation  fails  or  neglects  to 
obey  such  order  of  the  commission  while  the  same  is  in  effect,  the 
commission  may  apply  to  the  circuit  court  of  appeals  of  the  United 
States,  within  any  circuit  where  the  method  of  competition  in  ques- 
tion was  used  or  where  such  person,  partnership,  or  corporation 
resides  or  carries  on  business,  for  the  enforcement  of  its  order, 
and  shall  certify  and  file  with  its  application  a  transcript  of  the 
entire  record  in  the  proceeding,  including  all  the  testimony  taken  and 
the  report  and  order  of  the  commission.  Upon  such  filing  of  the 
application  and  transcript  the  court  shall  cause  notice  thereof  to 
be  served  upon  such  person,  partnership,  or  corporation  and  there- 
upon shall  have  jurisdiction  of  the  proceeding  and  of  the  ques- 
tion determined  therein,  and  shall  have  power  to  make  and  enter 
upon  the  pleadings,  testimony,   and  proceedings   set   forth   in   such 


( 


r 

h 


'\' 


52         THE  FEDERAL  TRADE  COMMISSION 

transcript  a  decree  confirming,  modifying,  or  setting  aside  the  order 
of  the  commission.  The  findings  of  the  commission  as  to  the  facts, 
if  supported  by  testimony,  shall  be  conclusive  if  either  party  shall 
apply  to  the  court  for  leave  to  adduce  additional  evidence,  and 
shall  show  to  the  satisfaction  of  the  court  that  such  additional  evi- 
dence is  inaterial  and  that  there  were  reasonable  grounds  for  the 
failure  to  adduce  such  evidence  in  the  proceeding  before  the  com- 
mission, the  court  may  order  such  additional  evidence  to  be  taken 
before  the  commission  and  to  be  adduced  upon  the  hearing  in  such 
manner  and  upon  such  terms  and  conditions  as  to  the  court  may 
seem  proper.  The  commission  may  modify  its  findings  as  to  the 
facts,  or  make  new  findings,  by  reason  of  the  additional  evidence 
so  taken,  and  it  shall  file  such  modified  or  new  findings,  which,  if 
supported  by  testimony  shall  be  conclusive,  and  its  recommenda- 
tion, if  any,  for  the  modification  or  setting  aside  of  its  original 
order,  with  the  return  of  such  additional  evidence.  The  judgment 
and  decree  of  the  court  shall  be  final,  except  that  the  same  shall 
be  subject  to  review  by  the  Supreme  Court  upon  certiorari  as 
provided  in  section  two  hundred  and  forty  of  the  Judicial  Code. 

Any  party  required  by  such  order  of  the  Commission  to  cease  and 
desist  from  using  such  method  of  competition  may  obtain  a  re- 
view of  such  order  in  said  circuit  court  of  appeals  by  filing  in 
the  court  a  written  petition  praying  that  the  order  of  the  Commis- 
sion be  set  aside.  A  copy  of  such  petition  shall  be  forthwith  served 
upon  the  Commission,  and  thereupon  the  Commission  forthwith 
shall  certify  and  file  in  the  court  a  transcript  of  the  record  as  here- 
inbefore provided.  Upon  the  filing  of  the  transcript  the  court  shall 
have  the  same  jurisdiction  to  affirm,  set  aside,  or  modify  the  order 
of  the  Commission  as  in  the  case  of  an  application  by  the  Com- 
mission for  the  enforcement  of  its  order  and  the  findings  of  the 
Commission  as  to  the  facts,  if  supported  by  testimony,  shall  in  like 
manner  be  conclusive. 

The  jurisdiction  of  the  circuit  court  of  appeals  of  the  United 
States  to  enforce,  set  aside,  or  modify  orders  of  the  Commission  shall 
be  exclusive. 

Such  proceedings  in  the  circuit  court  of  appeals  shall  be  given 
precedence  over  other  cases  pending  therein,  and  shall  be  in  every 
way  expedited.  No  order  of  the  Commission  or  judgment  of  the 
court  to  enforce  the  same  shall  in  anywise  relieve  or  absolve  any 
person,  partnership,  or  corporation  from  any  liability  under  the  anti- 
trust acts. 

Complaints,  orders,  and  other  processes  of  the  Commission  under 
this  section  may  be  served  by  anyone  duly  authorized  by  the  Com- 
mission, either  (a)  by  delivering  a  copy  thereof  to  the  person  to 
be  served,  or  to  a  member  of  the  partnership  to  be  served,  or 
to  the  president,  secretary  or  other  executive  office  or  a  director  of  the 
corporation  to  be  served;  or  (b)  by  leaving  a  copy  thereof  at  the 
principal  office  or  place  of  business  of  such  person,  partnership,  or 
corporation;  or  (c)  by  registering  and  mailing  a  copy  thereof 
addressed  to  such  person,  partnership  or  corporation  at  his  or 
its  principal  office  or  place  of  business.  The  verified  return  by  the 
person  so  serving  said  complaint,  order,  or  other  process  setting  forth 


LAWS 


53 


turn'T.f 'ffi  ^  ^^'^  ■^Z'''^  '^^"  ^^  P^°°f  °f  the  same,  and  the  re- 
turn post-office  receipt  for  said  complaint,  order,  or  other  orocess 

of  Ihf  1.:."'  ""^''  ^^   ^'°^^^^^^  '^^"  '^  Proof'o?  th^  'ser'c" 
Sec.  6     That  the  Commission  shall  also  have  power— 
(a;      lo  gather  and  compile  information  concernin<^    and  fn  m 
yestigate  from  timeTo  Hme  the  organization,  business  conduct  orac" 
tices,  and  management  of  any   corporation  engaged  i^  commerce" 
excepting  banks  and  common  carriers  subject  to  the  act  toTeeulate 

^^^:ntin:^^^  '''-  -'''-''-'  and  rJi^Xfd^ult 

^^  i^o=,  "L^^Z^^  ^^^-^^^ -i 

to  the  act  to  regulate  commerce,  or  any  class  of  them    or  Inv  of 

hem    respectively,  to  file  with  the  Commission  in  suih   form  as 

the  Commission  may  prescribe  annual  or  special,  or  both  aTnull 

n^shin'r^^VRl^r-'-  °-  ^."^-^^\i".  writing  to  specific  ques  ions  fur- 
nishing to  the  CSmmission  such  information  as  it  may  reauire  as 
to  the  organization,  business,  conduct,  practices  manaeement  anH 
relation  to  other  corporations,  partnerships,  and  individua L  of  the 
respective  corporations  filing  such  reporfs  or  answers  in  wrLne 
fh".  r'2'°-''-^"''  ='"'^"'  ^''^"'  ^^  '"^de  under  oath,  or  otherwi  e  Is 
1„  ^r'"°"J"^y  prescribe,  and  shall  be  filed  with  the  Commis! 
sion   withm   such    reasonable   period   as   the   Commission   mavTre 

mission"    "'  '*''^'"°""  *'"'  ""  ^""'^'^  '"  ^"y  "'-by  the'^Coml 

(c)  Whenever  a  final  decree  has  been  entered  aeainst  anv  de- 
fendant corporation  in  any  suit  brought  by  the  United  States  to^nre 
vent  and  restrain  any  violation  of  the  antitrust  acfs,     o  make^ir. 
cfflTi'°K'  "P°"  '!'  ?"^  inh-Mive,  of  the  manner  in  Whkh  Ae  de-) 
fu      a5    '^«-"  »■•  IS  l>e'ng  carried  out,  and  upon  the  apnlication  0/ 

ttnn'^Vr.f^u^""^'-''  ^''^"  ^^  "^  d"ty  to  Vke  such    nv^stiga- 
tion     It  shall  transmit  to  the  Attorney  General  a  report  embodv 
mg  Its  findings  and  recommendations  as  a  result  of  any  suchl^vesti 
Commissron        '''"""'  '''"  ""  """"'  P"''"^  '"  '"^^  dis'cretion  o7the 

(d)  Upon  the  direction  of  the  President_im_eiiher-.Hottse  of 
Congress  to  investigate  and  report  the-fiHrr?llIh^^,^7ne„ed 
viola  ions  of  the  antitrust  acts  by  any  corporation  ^       ^ 

(e)  Upon  the  application  of  the  Attorney  General   to  investi- 
gate and  make  recommendations  for  the  adjusWnt  of  the  business 
of   any   corporation   alleged    to   be    violating   the    antitrust    acts    fn 
order  that  the  corporation  may  thereafter  maintain  "tsorglnfzation 
management,  and  conduct  of  business  in  accordance  with  Taw  ' 

(f)  To  maks^blic  from  time  to  time  such  portions  of  the  in- 
formation obtained  by  It  hereunder,  except  trade  secrets  and  nimes 
of  customers,  as  it  shall  deem  expedient  in  the  public  interest 
and  o  make  annual  and  special  reports  to  the  Congress  and  to 
submit  therewith  recommendations  for  additional  legisTat  on  and 
to  provide  for  the  publication  of  its  reports  and  decTsions  in'  such 

aTus'e      """"''  ''  "'^  •"  "*''  "''"P'''*  ^°'  P"'"''=  info  mat"on 


'1 


i 


54  THE  FEDERAL  TRADE  COMMISSION 

(g)  From  time  to  time  to  classify  corporations  and  to  make 
rules  and  regulations  for  the  purpose  of  carrying  out  the  provi- 
sions of  this  act. 

(h)  To  investigate,  from  time  to  time,  trade  conditions  in  and 
Nyith  foreign  countries  where  associations,  combinations,  or  prac- 
tices of  manufacturers,  merchants,  or  traders,  or  other  conditions, 
may  affect  the  foreign  trade  of  the  United  States,  and  to  report 
to  Congress  thereon,  with  such  recommendations  as  it  deems  ad- 
visable 

Sec.  7.  That  in  any  suit  in  equity  brought  by  or  under  the 
direction  of  the  Attorney  General  as  provided  in  the  antitrust 
acts,  the  court  may,  upon  the  conclusion  of  the  testimony  therein,  if 
it  shall  be  then  of  opinion  that  the  complainant  is  entitled  to  relief, 
refer  said  suit  to  the  commission,  as  a  master  in  chancery,  to  as- 
certain and  report  an  appropriate  form  of  decree  therein.  The 
commission  shall  proceed  upon  such  notice  to  the  parties  and  under 
such  rules  of  procedure  as  the  court  may  prescribe,  and  upon  the 
coming  in  of  such  report  such  exceptions  may  be  filed  and  such 
proceedings  had  in  relation  thereto  as  upon  the  report  of  a  master 
in  other  equity  causes,  but  the  court  may  adopt  or  reject  such  re- 
port, in  whole  or  in  part,  and  enter  such  decree  as  the  nature  of 
the  case  may  in  its  judgment  require. 

Sec.  8.  That  the  several  departments  and  bureaus  of  the  Govern- 
ment when  directed  by  the  President  shall  furnish  the  commission, 
upon  its  request,  all  records,  papers,  and  information  in  their  posses- 
sion relating  to  any  corporation  subject  to  any  of  the  provisions 
of  this  act,  and  shall  detail  from  time  to  time  such  officials  and  em- 
ployees to  the  Commission  as  he  may  direct. 

Sec.  9.  That  for  the  purposes  of  this  act  the  Commission,  or  its 
duly  authorized  agent  or  agents,  shall  at  all  reasonable  times  have 
access  to,  for  the  purpose  of  examination,  and  the  right  to  copy  any 
documentary  evidence  of  any  corporation  being  investigated  or  pro- 
ceeded against;  and  the  Commission  shall  have  power  to  require 
by  subpoena  the  attendance  and  testimony  of  witnesses  and  the 
production  of  all  such  documentary  evidence  relating  to  any  matter 
under  investigation.  Any  member  of  the  Commission  may  sign 
subpoenas,  and  members  and  examiners  of  the  Commission  may  ad- 
minister oaths  and  affirmations,  examine  witnesses,  and  receive 
evidence. 

Such  attendance  of  witnesses,  and  the  production  of  such  docu- 
mentary evidence,  may  be  required  from  any  place  in  the  United 
States,  at  any  designated  place  of  hearing.  And  in  case  of  dis- 
obedience to  a  subpoena  the  Commission  may  invoke  the  aid  of 
any  court  of  the  United  States  in  requiring  the  attendance  and 
testimony  of  witnesses  and  the  production  of  documentary  evi- 
dence. 

Any  of  the  district  courts  of  the  United  States  within  the  juris- 
diction of  which  such  inquiry  is  carried  on  may,  in  case  of  con- 
tumacy or  refusal  to  obey  a  subpoena  issued  to  any  corporation 
or  other  person,  issue  an  order  requiring  such  corporation  or  other 
person  to  appear  before  the  Commission,  or  to  produce  documentary 
evidence  if  so  ordered,  or  to  give  evidence  touching  the  matter  in 


r 


LAWS 


55 


question ;  and  any  failure  to  obey  such  order  of  the  court  mav 
be  punished  by  such  court  as  a  contempt  thereof  ^ 

atVhe"reau«?^rth°"r  ^  "^  •  "^""'"^^  5.*"^^^'  "^  *^  United  States, 
State!  ,l?.n  Li  ■'  Commission,  the  district  courts  of  the  United 
mlnnLi  jurisdiction  to   issue   writs  of   mandamus  com- 

^f^M^^o\"^  P"'°"  °'.  corporation  to  compIy-^flT  the  provisTons 
Thereof.  °'  ''"^  °"'  °*  "•'  Commission  made  in  pursuance 
.  The  commission  may  order  testimony  to  be  taken  bv  deoositinn 
^J7JT"f'"^  or  investigation  pending  under  ?hi7a«^a"^„" 
be^alcen  hefnr/=°"''''"^  °l  investigation.  Such  depositions  may 
incr  „„  ;       I"y  P"^°"  designated  by  the  commission  and  hav- 

ing power  to  administer  oaths.  Such  testimony  shall  be  reduced 
to  writing  by  the  person  taking  the  deposition,  or  under  his  d"rec- 
tion,  and  shall  then  be  subscribed  by  the  deponent.    Any  person  may 

eviden'^e'1n1he°«r''''  ^"'^  ^"""'^  ^"<^  '°  P^°''""  documenS?^ 
D«r  and  t«Hf  T  ""^r^'  f  ^  witnesses  may  be  compelled  to  ap- 
pear and  testify  and  produce  documentary  evidence  before  the  com- 
mission as  hereinbefore  provided. 

Witnesses   summoned   before   the   commission   shall   be   oaid  the 

UnTj'ILf  ""'if'^?  *"'  "'  P^'''  *i'"^«s«  in  ?he  court^s  of  he 
United  States,  and  witnesses  whose  depositions  are  taken  and  thl 

?eeTa"/at;a^  wntr  ='?"  ''"T^^  "^  *«'"*<1  to'the  sam^ 
lees  as  are  pa  d  for  like  services  m  the  courts  of  the  United  States 

No  person  shall  be  excused  from  attending  and  testify^  or  from 

producing  documentary  evidence  before  the^  commission  oMnoT 

reason  that  the  ^P.'^t"'  °^  *'  commission  on  the  ground  or  for  the 
reason  that  the  testimony  or  evidence,  documentary  or  otherwise 

oenaltv  or  f.rJ?.  ""'^  p"f  '°  '^""''"^'^  ^'""  °'  ="bject  h  m  to  a 
penalty  or  forfeiture.     But  no  natural  person  shall  be  prosecuted  or  1 

subjected  to  any  penalty  or  forfeiture  for  or  on  account  of  anv' 

transaction,  matter    or  thing  concerning  which  he  may  testify    or 

robedienceTo".'  '^T"'''''^"^  °J  .ort'"^'^^'  ''^^"^^  the^oSsion 
in  obedience  to  a  subpoena  issued  by  it :  Provided,  That  no  natural 
person  so  testifying  shall  be  exempt  from  prosecution  and  Dun"sh- 
ment  for  perjury  committed  in  so  testifying  ^ 

and  t«t?fv  Ir^'n^"^  ^"^°"  "'^  ?^?"-  "^«^'^<='  or  refuse  to  attend 
and  testify,  or  to  answer  any  lawful  inquiry,  or  to  produce  docu- 
mentary evidence,  if  in  his  power  to  do  so    in  obJdience  to  the 
subpoena  or  lawful  requirement  of  the  commission,  sM  be  guilty 
of  an  offense  and  upon  conviction  thereof  by  a  court  of  competent 
more'rhr$tto  ■^^^P""'-''''''^  "  '"^°^  "°'  '^^^  ^^an  $°Xnor 
Tby  loth  fu'ch  Ve?„^d  ImSS  '"'  "°'  '"°''  "^^"  °-  y-"' 
Any   person    who   shall    willfully    make,    or   cause    to   be    made 
any  false  entry  or  statement  of  fact  in  any  report  required  tTbe 
made  under  this  act,  or  who  shall  willfully  make,  or  cause  to  be  made 
any  false  entry  in  any  account,  record,  or  memorandum  kept  brany 
corporation   subject   to  this  act,   or  who  shall   willfully  neglect  or 
fail  to  make,  or  to  cause  to  be  made,  full,  true,  and  correct  entries 
in  such  accounts,  records    or  memoranda,  of  all  facts  and  trans- 
actions appertaining  to  the  business  of  such  corporation,  or  who 


r 


I 


I 


56         THE  FEDERAL  TRADE  COMMISSION 

shall  willfully  remove  out  of  the  jurisdiction  of  the  United  States, 
or  willfully  mutilate,  alter,  or  by  any  other  means  falsify  any  docu- 
mentary evidence  of  such  corporation,  or  who  shall  willfully  re- 
fuse to  submit  to  the  Commission  or  to  any  of  its  authorized  agents, 
for  the  purpose  of  inspection  and  taking  copies,  any  documentary 
evidence  of  such  corporation  m  his  possession  or  within  his  control, 
shall  be  deemed  guilty  of  an  offense  against  the  United  States 
and  shall  be  subject,  upon  conviction  in  any  court  of  the  United  States 
of  competent  jurisdiction,  to  a  fine  of  not  less  than  $1,000  nor  more 
than  $5,000,  or  to  imprisonment  for  a  term  of  not  more  than  three 
years,  or  to  both  such  fine  and  imprisonment. 

If  any  corporation  required  by  this  act  to  file  any  annual  or 
special  report  shall  fail  so  to  do  within  the  time  fixed  by  the  com- 
mission for  filing  the  same,  and  such  failure  shall  continue  for 
thirty  days  after  notice  of  such  default,  the  corporation  shall  for- 
feit to  the  United  States  the  sum  of  $100  for  each  and  every  day 
of  the  continuance  of  such  failure,  which  forfeiture  shall  be  pay- 
able into  the  Treasury  of  the  United  States,  and  shall  be  recov- 
erable in  a  civil  suit  in  the  name  of  the  United  States  brought 
in  the  district  where  the  corporation  has  its  principal  office  or  in 
any  district  in  which  it  shall  do  business.  It  shall  be  the  duty 
of  the  various  district  attorneys,  under  the  direction  of  the  Attorney 
General  of  the  United  States,  to  prosecute  for  the  recovery  of  for- 
feitures. The  costs  and  expenses  of  such  prosecution  shall  be 
paid  out  of  the  appropriation  for  the  expenses  of  the  courts  of  the 

United  States.  .    ,  ,       ,    „        1  u 

Any  officer  or  employee  of  the  Commission  who  shall  make  pub- 
lic any  information  obtained  by  the  Commission  without  its  authority, 
unless  directed  by  a  court,  shall  be  deemed  guilty  of  a  misdemeanor, 
and,  upon  conviction  thereof,  shall  be  punished  by  a  fine  not  ex- 
ceeding $5,000,  or  by  imprisonment  not  exceeding  one  year  or  by 
fine  and  imprisonment,   in  the  direction  of  the  court. 

Sec  II.  Nothing  contained  in  this  act  shall  be  construed  to 
prevent  or  interfere  with  the  enforcement  of  the  provisions  of  the 
antitrust  acts  or  the  acts  to  regulate  commerce,  nor  shall  anything 
contained  in  the  act  be  construed  to  alter,  modify,  or  repeal  the 
said  antitrust  acts  or  the  acts  to  regulate  commerce  or  any  part 
or  parts  thereof. 

191 4— Act  of  October  15,  191 4  (3^  Stat.  L.,  730)— An  Act 
To  supplement  existing  laws  against  unlawful  re- 
straints and  monopolies,  and  for  other  purposes. 

[Sec.  i]  .  .  .  "Commerce,"  as  used  herein,  means  trade  or  com- 
merce among  the  several  States  and  with  foreign  nations,  or  be- 
tween the  District  of  Columbia  or  any  Territory  of  the  United 
States  and  any  State,  Territory,  or  foreign  nation,  or  between 
any  insular  possessions  or  other  places  under  the  jurisdiction  of 
the  United  States,  or  between  any  such  possession  or  place  and 
any  State  or  Territory  of  the  United  States  or  the  District  of 
Columbia  or  any  foreign  nation,  or  within  the  District  of  Columbia  or 


LAWS 


57 


II 


any  Territory  or  any  insular  possession  or  other  place  under  the 
jurisdiction  of  the  United  States:  Provided,  That  nothing  in  this 
act  contained  shall  apply  to  the  Philippine  Islands. 

The  word  "person"  or  ''persons"  wherever  used  in  this  act 
shall  be  deemed  to  include  corporations  and  associations  existing 
under  or  authorized  by  the  laws  of  either  the  United  States,  the 
laws  of  any  of  the  Territories,  the  laws  of  any  State,  or  the  laws 
of  any  foreign  country. 

Sec.  2.  That  it  shall  be  unlawful  for  any  person  engaged  in  com- 
merce, in  the  course  of  such  commerce,  either  directly  or  indirectly, 
to  discrimimite  in  price  between  different  purcjiasers  of  commodities, 
which  commodities  are  sold  for  use,  consumption,  or  resale  within 
the  United  States  or  any  Territory  thereof  or  the  District  of 
Columbia  or  any  insular  possession  or  other  place  under  the  juris- 
diction of  the  United  States,  where  the  effect  of  such  discrimination 
may  be  to  substantially  lessen  competition  or  tend  to  create  a 
monopoly  in  any  line  of  commerce :  Provided,  That  nothing  herein 
contained  shall  prevent  discrimination  in  price  between  purchasers 
of  comniodities  on  account  of  differences  in  the  grade,  quality, 
or  quantity  of  the  commodity  sold,  or  that  makes  only  due  allow- 
ance for  differences  in  the  cost  of  selling  or  transportation,  or 
discrimination  in  price  in  the  same  or  different  communities  made 
in  good  faith  to  meet  competition:  And  provided  further,  That 
nothing  herein  contained  shall  prevent  persons  engaged  in  selling 
goods,  wares,  or  merchandise  in  commerce  from  selecting  their  own 
customers  in  bona   fide  transactions  and   not   in   restraint  of  trade. 

Sec  3.  That  it  shall  be  unlawful  for  any  person  engaged  in 
commerce,  in  the  course  of  such  commerce,  to  lease  or  make  a  sale 
or  contract  for  sale  of  goods,  wares,  merchandise,  machinery,  sup- 
plies, or  other  commodities,  whether  patented  or  unpatented,  for 
use,  consumption,  or  resale  within  the  United  States  or  any  Terri- 
tory thereof  or  the  District  of  Columbia  or  any  insular  possession 
or  other  place  under  the  jurisdiction  of  the  United  States,  or  fix 
a  price  charged  therefor,  or  discount  from,  or  rebate  upon,  such 
grice,  onthe_  condition,  agreement,  or  understanding  that  the  lessee 
or  purchaser  thereof  shall  not  use  or  deal  in  the  goods,  wares, 
merchandise,  machinery,  supplies,  or  other  commodities  of  a  com- 
petitor qr_competitors  of  the  lessor  or  seller,  where  the  effect  of 
sucTTTease,  sale,  or  contract  for  sale  or  such  condition,  agreement 
or  understanding  may  be  to  substantially  les^giL-CQim^etition  or  tend 
to  creat^_j;^onopoly  in  any  line  of  commerce. 

*     *     *     * 

Sec.  7.  That  no  corporation  engaged  in  commerce  shall  ac- 
quire directly  or  indirectly,  the  whole  or  any  part  of  the  stock 
or  other  share  capital  of  another  corporation  engaged  also  in  com- 
merce, where  the  effect  of  such  acquisition  may  be  to  substan- 
tially lessen  competition  between  the  corporation  whose  stock  is  so 
acquired  and  the  corporation  making  the  acquisition,  or  to  restrain 
such  commerce  in  any  section  or  community,  or  tend  to  create  a 
monopoly  of  any  line  of  commerce. 

No   corporation    shall   require,   directly   or   indirectly,   the   whole 


I 


A 


58         THE  FEDERAL  TRADE  COMMISSION 

or  any  part  of  the  stock  or  other  share  capital  of  two  or  more  cor- 
porations engaged  in  commerce  where  the  effect  of  such  acquisi- 
tion, or  the  use  of  such  stock  by  the  voting  or  granting  of  prox- 
ies or  otherwise,  may  be  to  substantially  lessen  competition  between 
such  corporations,  or  any  of  them,  whose  stock  or  other  share 
capital  is  so  acquired,  or  to  restrain  such  commerce  in  any  section 
or  community,  or  tend  to  create  a  monopoly  of  any  line  of  com- 
merce. 

This  section  shall  not  apply  to  corporations  purchasing  such  stock 
solely  for  investment  and  not  using  the  same  by  voting  or  other- 
wise to  bring  about,  or  in  attempting  to  bring  about,  the  substan- 
tial lessening  of  competition.  Nor  shall  anything  contained  in 
this  section  prevent  a  corporation  engaged  in  commerce  from  caus- 
ing the  formation  of  subsidiary  corporations  for  the  actual  carry- 
ing on  of  their  immediate  lawful  business,  or  the  natural  and  legiti- 
mate branches  or  extensions  thereof,  or  from  owning  and  holding 
all  or  a  part  of  the  stock  of  such  subsidiary  corporations,  when  the 
effect  of  such  formation  is  not  to  substantially  lessen  competition. 

Nor  shall  anything  herein  contained  be  construed  to  prohibit  any 
common  carrier  subject  to  the  laws  to  regulate  commerce  from 
aiding  in  the  construction  of  branches  or  short  lines  so  located  as 
to  become  feeders  to  the  main  line  of  the  company  so  aiding  in 
such  construction  or  from  acquiring  or  owning  all  or  any  part  of 
the  stock  of  such  branch  lines,  nor  to  prevent  any  such  common 
carrier  from  acquiring  and  owning  all  or  any  part  of  the  stock  of 
a  branch  or  short  line  constructed  by  an  independent  company  where 
there  is  no  substantial  competition  between  the  company  owning 
the  branch  line  so  constructed  and  the  company  owning  the  main 
line  acquiring  the  property  or  an  interest  therein,  nor  to  prevent 
such  common  carrier  from  extending  any  of  its  lines  through 
the  medium  of  the  acquisition  of  stock  or  otherwise  of  any  other 
such  common  carrier  where  there  is  no  substantial  competition  be- 
tween the  company  extending  its  lines  and  the  company  whose 
stock,  property,  or  an  interest  therein  is  so  acquired. 

Nothing  contained  in  this  section  shall  be  held  to  affect  or  im- 
pair any  right  heretofore  legally  acquired:  Provided,  That  nothing 
in  this  section  shall  be  held  or  construed  to  authorize  or  make 
lawful  anything  heretofore  prohibited  or  made  illegal  by  the  anti- 
trust laws,  nor  to  exempt  any  person  from  the  penal  provisions 
thereof  or  the  civil  remedies  therein  provided. 

Sec.  8.  That  from  and  after  two  years  from  the  date  of  the 
approval  of  this  act  no  person  at  the  same  time  shall  be  a  director 
m  any_  two  c>r  ingre  corporations,  any  one  of  which  has  capital, 
surplus,  and  undivideTprofits  aggregating  more  than  $i,ooq^ooQ,  en- 
gaged in  whole  or  in  part  in  commerce,  other  than  l)ahlcs,  bank- 
ing associations,  trust  companies,  and  common  carriers  subject  to 
the  act  to  regulate  commerce,  approved  February  fourth,  eighteen 
hundred  and  eighty-seven,  if  such  corporations  are  or  shall  have 
been  theretofore,  by  virtue  of  their  business  and  location  of  opera- 
tion, com£etitprs,  so  that  the  elimination  of  competition  by  agree- 
ment between  them  would  constitute  a  violation  of  any  of  the  pro- 
visions of  any  of  the  anti-trust  laws.    The  eligibility  of  a  director 


LAWS 


59 


. 


under  the  foregoing  provision  shall  be  determined  by  the  aggre- 
gate amount  of  the  capital,  surplus,  and  undivided  profits,  exclusivt 
ot  dividends  declared  but  not  paid  to  stockholders,  at  the  end  of 
tne  fiscal  year  of  said  corporation  next  precedine  the  elertinn  nf 
directors,  and  when  a  director  has  been  eLted  i^^accordance  wi°l 
the  provisions  of  this  act  it  shall  be  lawful  for  hTm  to  cmitnue 
as  such  for  one  year  thereafter.  Lominue 

When  any  person  elected  or  chosen  as  a  director  or  officer  or  se- 
ected  as  an  employee  of  any  bank  or  other  corporation  subject  to 
i^,?tr«rrL°^  *'1*k'  '',"''2'"^  «'  "'^  t'™^  °f  his  election  or  selec- 
his  eltibU  tv  t'n  frt  •  ^^"\°'  °*'''  "JP°r^'io"  in  such  capacity 
iholi  ^l  1.^  °  ^^^  ,'"  ^"<=''  capacity  shall  not  be  affected  and  he 
shall  not  become  or  be  deemed  amenable  to  any  of  the  provisions 
hereof  by  reason  of  any  change  in  the  affairs  of'^such  bank  or  o  her 
corporation    from   whatsoever   cause,   whether   specifically   exceDted 

5earTrom'ther/"'r.'-'''r^°^  ""'■  ""'''  the' expirl^on  of  "^.'e 
year  from  the  date  of  his  election  or  employment. 

*     *     *     * 

fw^^^k""     ^''^'   authority   to    enforce    compliance    with    sections 
two,  three,  seven,  and  eight  of  this  act  by  the  persons  resoect  veW 
subject  thereto  is  hereby  vested:     In  the  Interstate  Commerce  Com 
mission  where  applicable  to  common  carriers,  in  the  Federal  Re- 
serve Board  where  applicable  to  banks,   banking  associa^ons  mid 

plicableTo' alJ'o'ther'c^"  ''f  ^'f'^'  '^^'^^^  Com^miss'ion'trre  X- 
fows :  character  of  commerce,  to  be  exercised  as  fol- 

Whenever  the  Commission  or  Board  vested  with  jurisdiction  there- 

volat'ed  anro?Z"nrn'-'"^'  'Y  ''"^  P*"°"  -  violat1ng"or  has 
Ight  of  «?i^  act  if  iln  •  "'  °\  ''"'°"''  t^°'  *^^^'  seven,  and 
D  f  int  statil  fA'  i  '!sne  and  serve  upon  such  person,  a  com- 

plaint stating  Its  charges  in  that  respect,  and  containing  a  notice 

divs  after"^th?°"/  "^'^  "f  ^'Z  P'^«  *^^^'"  fixed  at  Tea^t  "hi  ^ 
pfabed  of%h.n  h!  f,,°^-l^"^  complaint.  The  person  so  com- 
fixed  and.tfw  *e  "ght  to  appear  at  the  place  and  time  so 

hxetl  and  show  cause  why  an  order  should  not  be  entered  bv  the 
Commission  or  Board  requiring  such  person  to  cease  and  desk? 
from  the  violation  of  the  law  so  charged  in  saW  complaint     Anv 

b^e^Xw^d^v^th^  c'„P''""'?"'  ^"^"P°."  ^-""^  cause'l^own  ^a^ 
pe  allowed  by  the  Commission  or  Board  to  intervene  and  annear 

in  said  proceeding  by  counsel  or  in  person.  The  [estimonv  fn  anv 
such  proceeding  shall  be  reduced  to  writing  and  filed  Tn  "he  office 
of  the  Comniission  or  Board.     If  upon  such  hearing  the  Commk! 

T,^:^rT-^'  ^'  "J"  "=?r  ""^y  ^-  shall  be  of  the  ofin?o„  thaHny 
of  the  provisions  of  said  sections  have  been  or  are  bein?  vio  a^ed 

asto  the^ft';,'  Tl'n  ^"""^  !."  ""^''^  't  shall  state  "?s  Endings 
as  to  the  facts,  and  shall  issue  and  cause  to  be  served  on  such  per- 
son an  order  requiring  such  person  to  cease  and  desist  from  such 
violations  and  divest  itself  of  the  stock  held  or  rid  itselT^f  "he 
directors  chosen  contrary  to  the  provisions  of  sections  seven  and  ei^ht 
of  this  act  If  any  there  be,  in  the  manner  and  within  the  time 
fixed  by  said  order.  Until  a  transcript  of  the  record  in  such  hew- 
ing shall  have  been  filed  in  a  circuit  court  of  appeals  of  the  United 


4 

•  *  r 


I 


hi 


I 


I' 


1; 


60         THE  FEDERAL  TRADE  COMMISSION 

States,  as  hereinafter  provided  the  Commission  or  Board  may  at 
any  time  upon  such  notice  and  in  such  manner  as  it  shall  deem 
proper,  modify  or  set  aside,  in  whole  or  in  part  any  report  or  any 
order  made  or  issued  by  it  under  this  section. 

If  such  person  fails  or  neglects  to  obey  such  order  of  the  Com- 
mission or  Board  while  the  same  is  in  effect,  the  Commission  or 
Board   may   apply  to  the   circuit   court   of   appeals   of   the   United 
States,   within   any  circuit  where  the   violation  complained   of   was 
or   is   being   committed    or   where   such    person    resides   or   carries 
on    business,    for   the    enforcement    of   its    order,    and    shall   certify 
and  file  with  its  appplication  a  transcript  of  the  entire  record  in  the 
proceedings  including  all  the  testimony  taken  and  the  report  and  order 
of  the  Commission  or  Board.     Upon  such  filing  of  the  application 
and  transcript  the   court   shall   cause   notice   thereof   to  be   served 
upon    such   person   and   thereupon   shall   have   jurisdiction    of   the 
proceeding  and  of  the  question  determined  therein,  and  shall  have 
power  to  make  and  enter  upon  the  pleadings,  testimony,   and  pro- 
ceedings  set   forth   in   such   transcript,   a   decree   affirming,   modify- 
ing, or  setting  aside  the  order  of  the  Commission  or  Board.     The 
findings  of  the  Commission  or  Board  as  to  the  facts,  if  supported 
by  testimony,   shall   be   conclusive.     If   either  party  shall   apply   to 
the  court   for  leave  to  adduce  additional  evidence,   and  shall   show 
to   the   satisfaction   of   the   court   that   such    additional   evidence   iS 
material  and  that  there  were  reasonable  grounds  for  the  failure  to 
adduce  such  evidence  in  the  proceeding  before  the  Commission  or 
Board,  the  court  may  order  such  additional  evidence  to  be  taken 
before    the    Commission    or    Board    and   to    be    adduced   upon    the 
hearing  in  such  manner  and  upon  such  terms  and  conditions  as  to 
the  court  may  seem  proper.     The  Commission  or  Board  may  modify 
its   findings  as  to   the   facts,   or  make   new   findings,   by   reason   of 
the  additional  evidence  so  taken,  and  it  shall  file  such  modified  or 
new  findings,  which,  if  supported  by  testimony,  shall  be  conclusive, 
and    its    recommendation,    if   any,    for   the   modification    or    setting 
aside  of  its  original  order,  with  the  return  of  such  additional  evi- 
dence.    The  judgment  and  decree  of  the  court  shall  be  final,  except 
that  the  same  shall  be  subject  to  review  by  the  Supreme  Court  upon 
certiorari    as   provided    in    section   two   hundred    and    forty   of   the 
Judicial  Code. 

Any  party  required  by  such  order  of  the  Commission  or  Board  to 
cease  and  desist  from  a  violation  charged  may  obtain  a  review  of 
such  order  in  said  circuit  court  of  appeals  by  filing  in  the  court 
a  written  petition  praying  that  the  order  of  the  Commission  or 
Board  be  set  aside.  A  copy  of  such  petition  shall  be  forthwith  served 
upon  the  Commission  or  Board,  and  thereupon  the  Commission 
or  Board  forthwith  shall  certify  and  file  in  the  court  a  transcript  of 
the  record  as  hereinbefore  provided.  Upon  the  filing  of  the  tran- 
script the  court  shall  have  the  same  jurisdiction  to  affirm,  set 
aside,  or  modify  the  order  of  the  Commission  or  Board  as  in  the 
case  of  an  application  by  the  Commission  or  Board  for  the  enforce- 
ment of  its  order,  and  the  findings  of  the  Commission  or  Board 
as  to  the  facts,  if  supported  by  testimony,  shall  in  like  manner 
be  conclusive. 


m  1 


LAWS 


61 


The  jurisdiction  of  the  circuit  court  of  appeals  of  the  United 
States  to  enforce,  set  aside,  or  modify  orders  of  the  commission 
or  board  shall  be  exclusive. 

Such  proceedings  in  the  circuit  court  of  appeals  shall  be  given 
precedence  over  other  cases  pending  therein,  and  shall  be  in  every 
way  expedited.  No  order  of  the  Commission  or  Board  or  the  judg- 
ment of  the  court  to  enforce  the  same  shall  in  any  wise  relieve 
or  absolve  any  person  from  any  liability  under  the  antitrust  acts. 

Complaints,  orders,  and  other  processes  of  the  Commission  or 
Board  under  this  section  may  be  served  by  anyone  duly  authorized 
by  the  Commission  or  Board,  either  (a)  by  delivering  a  copy  thereof 
to  the  person  to  be  served,  or  to  a  member  of  the  partnership  to 
be  served,  or  to  the  president,  secretary,  or  other  executive  officer 
or  a  director  of  the  corporation  to  be  served;  or  (b)  by  leaving 
a  copy  thereof  at  the  principal  office  or  place  of  business  of  such 
person;  or  (c)  by  registering  and  mailing  a  copy  thereof  addressed 
to  such  person  at  his  principal  office  or  place  of  business.  The  veri- 
fied return  by  the  person  so  serving  said  complaint,  order,  or  other 
process  setting  forth  the  manner  of  said  service  shall  be  proof  of 
the  same,  and  the  return  post-office  receipt  for  said  complaint, 
order,  or  other  process  registered  and  mailed  as  aforesaid  shall 
be  proof  of  the  service  of  the  same. 

1918 — Act  of  April  10,  1918  (40  Stat.  L.,  516) — An  Act  To 
promote  export  trade,  and  for  other  purposes. 

[Sec.  i]  .  That  the  words  "export  trade"  wherever  used  in  this 
Act  mean  solely  trade  or  commerce  in  goods,  wares,  or  merchandise 
exported,  or  in  the  course  of  being  exported  from  the  United  States 
or  any  Territory  thereof  to  any  foreign  nation:  but  the  words 
"export  trade"  shall  not  be  deemed  to  include  the  production, 
manufacture,  or  selling  for  consumption  or  for  resale,  within  the 
United  States  or  any  Territory  thereof,  of  such  goods,  wares,  or 
merchandise,  or  any  act  in  the  course  of  such  production,  manufac- 
ture, or  selling  for  consumption  or  for  resale. 

That  the  words  "trade  within  the  United  States"  wherever  used 
in  this  Act  mean  trade  or  commerce  among  the  several  States 
or  in  any  Territory  of  the  United  States,  or  in  the  District  of 
Columbia,  or  between  any  such  Territory  and  another,  or  between 
any  such  Territory  or  Territories  and  any  State  or  States  or  the 
District  of  Columbia,  or  between  the  District  of  Columbia  and  any 
State  or  States. 

That  the  word  "association"  wherever  used  in  this  Act  means 
any  corporation  or  combination,  by  contract  or  otherwise,  of  two 
or  more  persons,  partnerships,  or  corporations. 

Sec.  2.  That  nothing  contained  in  the  Act  entitled  "An  Act 
to  protect  trade  and  commerce  against  unlawful  restraints  and  mon- 
opolies," approved  July  second,  eighteen  hundred  and  ninety,  shall 
be  construed  as  declaring  to  be  illegal  an  association  entered  into 
for  the  sole  purpose  of  engaging  in  export  trade  and  actually  engaged 
solely  in  such  export  trade,  or  an  agreement  made  or  act  done  in 
the  course  of  export  trade  by  such  association,  provided  such  associa- 


;1 


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1  • 


62 


THE  FEDERAL  TRADE  COMMISSION 


tion,  agreement,  or  act  is  not  in  restraint  of  trade  within  the  United 
States,  and  is  not  in  restraint  of  the  export  trade  of  any  domestic 
competitor  of  such  association:  And  provided  further,  That  such 
association  does  not,  either  in  the  United  States  or  elsewhere,  enter 
into  any  agreement,  understanding,  or  conspiracy,  or  do  any  act 
which  artificially  or  intentionally  enhances  or  depresses  prices  within 
the  United  States  of  commodities  of  the  class  exported  by  such  as- 
sociation, or  which  substantially  lessens  competition  within  the  United 
States  or  otherwise  restrains  trade  therein. 

Sec.  3.  That  nothing  contained  in  section  seven  of  the  Act  en- 
titled "An  Act  to  supplement  existing  laws  against  unlawful  re- 
straints and  monopolies,  and  for  other  purposes,"  approved  Octo- 
ber fifteenth,  nineteen  hundred  and  fourteen,  shall  be  construed  to 
forbid  the  acquisition  or  ownership  by  any  corporation  of  the  whole 
or  any  part  of  the  stock  or  other  capital  of  any  corporation  or- 
ganized solely  for  the  purpose  of  engaging  in  export  trade,  and 
actually  engaged  solely  in  such  export  trade,  unless  the  efifect  of  such 
acquisition  or  ownership  may  be  to  restrain  trade  or  substantially 
lessen  competition  within  the  United  States. 

Sec.  4.  That  the  prohibition  against  "unfair  methods  of  com- 
petition" and  the  remedies  provided  for  enforcing  said  prohibition 
contained  in  the  act  entitled  "An  Act  to  create  a  Federal  Trade 
Commission,  to  define  its  powers  and  duties,  and  for  other  purposes," 
approved  September  twenty-sixth,  nineteen  hundred  and  fourteen, 
shall  be  construed  as  extending  to  unfair  methods  of  competition 
used  in  export  trade  against  competitors  engaged  in  export  trade, 
even  though  the  acts  constituting  such  unfair  methods  are  done  with- 
out the  territorial  jurisdiction  of  the  United  States. 

Sec.  5.  That  every  association  now  engaged  solely  in  export  trade, 
within  sixty  days  after  the  passage  of  this  act,  and  every  associa- 
tion entered  into  hereafter  which  engages  solely  in  export  trade, 
within  thirty  days  after  its  creation,  shall  file  with  the  Federal 
Trade  Commission  a  verified  written  statement  seting  forth  the 
location  of  its  offices  or  places  of  business  and  the  names  and  addres- 
ses of  all  its  officers  and  of  all  its  stockholders  or  members,  and  if  a 
corporation,  a  copy  of  its  certificate  or  articles  of  incorporation  and 
by-laws,  and  if  unincorporated,  a  copy  of  its  articles  or  contract 
of  association,  and  on  the  first  day  of  January  of  each  year  thereafter 
it  shall  make  a  like  statement  of  the  location  of  its  offices  or  places 
of  business  and  the  names  and  addresses  of  all  its  officers  and  of  all 
of  its  stockholders  or  members  and  of  all  amendments  to  and 
changes  in  its  articles  or  certificate  of  incorporation  or  in  its  articles 
or  contract  of  association.  It  shall  also  furnish  to  the  commission 
such  information  as  the  commission  may  require  as  to  its  organiza- 
tion, business,  conduct,  practices,  management,  and  relation  to  other 
associations,  corporations,  partnerships,  and  individuals.  Any  as- 
sociation which  shall  fail  so  to  do  shall  not  have  the  benefit  of  the 
provisions  of  section  two  and  section  three  of  this  act,  and  it  shall 
also  forfeit  to  the  United  States  the  sum  of  $100  for  each  and  every 
day  of  the  continuance  of  such  failure,  which  forfeiture  shall  be 
payable  into  the  Treasury  of  the  United  States,  and  shall  be  re- 
coverable in  a  civil  suit  in  the  name  of  the  United  States  brought 
in  the  district  where  the  association  has  its  principal  office,  or  in 


LAWS 


63 


any  district  in  which  it  shall  do  business.  It  shall  be  the  duty  of 
the  various  district  attorneys,  under  the  direction  of  the  Attorney 
General  of  the  United  States,  to  prosecute  for  the  recovery  of  the 
forfeiture.  The  costs  and  expenses  of  such  prosecution  shall  be 
paid  out  of  the  appropriation  for  the  expenses  of  the  courts  of  the 
United  States. 

Whenever  the  Federal  Trade  Commission  shall  have  reason  to 
believe  that  an  association  or  any  agreement  made  or  act  done  by 
such  association  is  in  restraint  of  trade  within  the  United  States  or 
in  restraint  of  the  export  trade  of  any  domestic  competitor  of  such 
association,  or  that  an  association  either  in  the  United  States  or 
elsewhere  has  entered  into  any  agreement,  understanding,  or  con- 
spiracy, or  done  any  act  which  artificially  or  intentionally^  enhances 
or  depresses  prices  within  the  United  States  of  commodities  of  the 
class  exported  by  such  association,  or  which  substantially  lessens 
competition  within  the  United  States  or  otherwise  restrains  trade 
therein,  it  shall  summon  such  association,  its  officers,  and  agents  to 
appear  before  it,  and  thereafter  conduct  an  investigation  into  the 
alleged  violations  of  law.  Upon  investigation,  if  it  shall  conclude 
that  the  law  has  been  violated,  it  may  make  to  such  association 
recommendations  for  the  readjustment  of  its  business,  in  order  that 
it  may  thereafter  maintain  its  organization  and  management  and 
conduct  its  business  in  accordance  with  law.  If  such  association  fails 
to  comply  with  the  recommendations  of  the  Federal  Trade  Commis- 
sion, said  commission  shall  refer  its  findings  and  recommendations 
to  the  Attorney  General  of  the  United  States  for  such  action  thereon 
as  he  may  deem  proper. 

For  the  purpose  of  enforcing  these  provisions  the  Federal  Trade 
Commission  shall  have  all  the  powers,  so  far  as  applicable,  given 
it  in  "An  Act  to  create  a  Federal  Trade  Commission,  to  define  its 
powers  and  duties,  and  for  other  purposes." 

1921 — Act  of  March  4,  1921  (41  Stat.  L.,  1380) — An  Act 
Making  appropriations  for  sundry  civil  expenses  of 
the  Government  for  the  fiscal  year  ending  June  30, 
1922,  and   for  other  purposes. 


Federal  Trade  Commission: 

For  five  commissioners,  at  $10,000  each;  secretary  $5,000;  in  all, 
$55,000. 

For  all  other  authorized  expenditures  of  the  Federal  Trade  Com- 
mission in  performing  the  duties  imposed  by  law  or  in  pursuance 
of  law,  including  personal  and  other  services  in  the  District  of 
Columbia  and  elsewhere,  supplies  and  equipment,  law  books,  books 
of  reference,  periodicals,  printing  and  binding,  traveling  expenses, 
per  diem  in  lieu  of  subsistence  not  to  exceed  $4,  newspapers,  foreign 
postage,  and  witness  fees  and  mileage  in  accordance  with  section 
9  of  the  Federal  Trade  Commission  Act,  $900,000. 


( 


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I 


I    ' 

;  < 


APPENDIX  5 

FINANCIAL  STATEMENT 

Explanatory  Note 

Statements  showing  appropriations,  receipts,  expenditures, 
and  other  financial  data  for  a  series  of  years  constitute  the 
most  effective  single  means  of  exhibiting  the  growth  and  de- 
velopment of  a  service.  Due  to  the  fact  that  Congress  has 
adopted  no  uniform  plan  of  appropriation  for  the  several 
services  and  that  the  latter  employ  no  uniform  plan  in  re- 
spect to  the  recording  and  reporting  of  their  receipts  and 
expenditures,  it  is  impossible  to  present  data  of  this  char- 
acter according  to  any  standard  scheme  of  presentation.  In 
the  case  of  some  services  the  administrative  reports  contain 
tables  showing  financial  conditions  and  operations  of  the  ser- 
vice in  considerable  detail;  in  other  financial  data  are  almost 
wholly  lacking.  Careful  study  has  in  all  cases  been  made  of 
such  data  as  are  available,  and  the  effort  has  been  made  to 
present  the  results  in  such  a  form  as  will  exhibit  the  financial 
operations  of  the  services  in  the  most  effective  way  that  cir- 
cumstances permit. 

The  Federal  Trade  Commission  began  operations  on 
the  balance  of  the  appropriations  originally  made  for  the 
Bureau  of  Corporations.  This  fund  was  made  available  for 
the  use  of  the  commission  by  the  ruling  of  the  Comptroller 
of  the  Treasury  under  section  three  of  the  act  creating  the 
commission  (38  Stat.  L.,  717).  Since  1916  the  com- 
mission has  received  regular  annual  appropriations  from  Con- 
gress. Prior  to  19 19  the  appropriations  for  "printing  and 
binding"   were  made   under  the  general   appropriations   for 

64 


FINANCIAL  STATEMENT 


65 


"printing  and  binding."  Subsequent  to  1918  the  sums 
available  for  printing  and  binding  have  been  included  in  the 
commisdor^'s  appropriation  for  "all  other  expenses.  •  Of 
the  total  appropriation  for  the  fiscal  year  1919,  $200,000.00 
was  returned  to  the  general  fund  of  the  treasury  m  accord- 
ance with  the  act  of  July  19,  iQiQ-  The  expenditures  listed 
in  the  following  tables  are  figured  on  a  cash  basis,  ihat  is, 
the  amounts  given  as  expended  represent  the  amount  ex- 
pended out  of  a  specific  appropriation  during  the  current  fiscal 
year  only. 


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APPENDIX  6 

BIBLIOGRAPHY » 

FEDERAL  TRADE  COMMISSION 

Explanatory  Note 

The  biblographies  appended  to  the  several  monographs  aim 
to  hst  only  those  works  which  deal  directly  with  the  services 
to  which  they  relate,  their  history,  activities,   organization, 
methods  of  business,  problems,  etc.     They  are  intended  pri- 
marily to  meet  the  needs  of  those  persons  who  desire  to  make 
a  further  study  of  the  services  from  an  administrative  stand- 
point.    They  thus  do  not  include  the  titles  of  publications 
of  the  services  themselves,  except  in  so  far  as  they  treat  of 
the  services,  their  work  and  problems.     Nor  do  they  include 
books  or  articles  dealing  merely  with  technical  features  other 
than  administrative  of  the  work  of  the  services.     In  a  few 
cases  explanatory  notes  have  been  appended  where  it  was 
thought  they  would  aid  in  making  known  the  character  or 
value  of  the  publication  to  which  they  relate. 

After  the  completion  of  the  series  the  bibliographies  may 
be  assembled  and  separately  published  as  a  bibliography  of 
the  Administrative  Branch  of  the  National  Government. 

Official  Publications 
U.  S.  Bureau  of  education.     Guide  to  United  States  govern- 
ment   publications  .  .  .     Washington,    Govt,    print,    off 
1918.     206  p.       {Its  Bulletin,  1918,  No.  2) 
"Federal  trade  commission,"  p.  145-147. 

Bureau  of  efUdency.     Foreign  trade  promotion  work 

*  Compiled  by  M.  Alice  Matthews 

68 


(r 


BIBLIOGRAPHY 


69 


.  .  .  on  the  federal  government's  activities  in  the  promo- 
tion of  foreign  commerce.     Washington,  Govt,  print,  off., 
1920.     88  p. 
"Federal  trade  commission,"  p.  83-84. 

Congress.     Conference     committees,     1914-     Federal 


trade  commission  .  .  .  Conference  report.  To  accompany 
H.  R.  1 5613.  [Washington,  Govt,  print,  off.,  1914] 
^9  P-     (63^  Cong.,  2d  sess.     House,   Kept.    1142) 

Serial  6560. 
House.     Committee   on   inter'state  and  foreign 


commerce.  Interstate  trade  commission.  Hearings  .  .  . 
Jan.  30  to  Feb.  16,  19 14.  Washington,  Govt,  print,  off., 
1914.     485  p. 

[Statements  of  L.  D.  Brandeis,  Waddell  Catchings,  Seth  Low, 
and  others] 

Interstate   trade   commission.     Report  /to 


accompany  H.  R.  15613  .  .  .  April  14,  20,  1914. 
Washington,  Govt,  print,  off.,  19 14.  3  pts.  (63d  Cong., 
2d  sess.     House.  Rept.  533)  Serial  6559. 

Committee  on  patents.     Administration  of  cer- 


tain inventions  and  patents  by  Federal  trade  commission, 
and    hearings    on    H.    R.     14944  .  .  .     Jan.    zy,    19 19. 
Washington,  Govt,  print,  off.,  19 19.     51  p. 
Administration   of  certain  inventions  and 


patents  by  Federal  trade  commission,  joint  hearings  before 
committees  on  patents  of  Senate  and  House  on  S.  3223 
[and]  H.  R.-  9932  .  .  .  Nov.  5,  1919.     Washington,  Govt, 
print,  off.,  1919.     41  p. 
Administration  of  certain  inventions  and 


patents  .  .  .  Report  to  accompany  H.  R.  14944  .  .  . 
March  3,  1919.  [Washington,  Govt,  print,  off.,  1919] 
3  p.     (65th  Cong.,  3d  sess.     House.     Rept.  11 69) 

Federal     trade      commission      to     accept 


patents.     Hearing  on  S.  3223  and  H.  R.  9932,  66th  Cong., 
2d  sess.     Washington,  Govt,  print,  off.,   1920.     15  p. 

Federal   trade  commission  .  .  .     Report. 


i 


to  accompany  H.   R.  9932,   Feb.   3,   1920.     Washington, 


70         THE  FEDERAL  TRADE  COMMISSION 

1920.     3  p.      (66th  Cong.,  2d  sess.     House.     Rept.  595) 

Committee  on  revision  of  the  laws.     Revision 

of  laws.  Common  carriers  and  antitrust  .  .  .  Report. 
To  accompany  H.  R.  12420.  Washington,  Govt,  print, 
off.,  1916.  2  V.  (64th  Cong.,  1st  sess.  House.  Rept. 
284)  Serial  6906. 

Senate.     Committee    on    interstate    commerce. 


BIBLIOGRAPHY 


71 


Control  of  corporations,  persons,  and  firms  engaged  in  in- 
terstate commerce;  report  pursuant  to  S.  Res.  98  .  .  . 
with  hearings,  digest,  and  index.  Washington,  Govt, 
print  off.,  1913.     2  V. 

— Federal   trade   commission  .  .  .     Report. 

To  accompany  H.  R.  15613  .  .  .  June  13,  1914. 
[Washington,  Govt,  print,  off.,  1914]  42  p.  (63d  Cong., 
2d  sess.     Senate.     Rept.     597)  Serial  6553. 

Interstate   trade.     Hearings  ...    on   bills 


relating  to  trust  legislation  .  .  .  Washington,  Govt, 
print  off.,  1914.     2  V. 

Committee    on    patents.     Authorizing    Federal 

trade  commission  to  accept  inventions  and  patents,  report 
to  accompay  S.  3223.  Jan.  31,  1920.  Washington, 
Govt,  print,  off.,  1920.  3  p.  (66th  Cong.,  2d  sess. 
Senate.     Rept.  405)  Serial  7649. 

—     Federal     trade     commission.     Acts   from  which  the 


Commission  derives  its  powers,  with  annotations.  Deci- 
sions of  the  courts  on  petitions  to  review  and  rules  of  prac- 
tice before  the  Commisision.  Dec,  .1920.  Washington, 
Govt,  print,  off.,  1920.     120  p. 

Annual     report,     [ist]     191 5-.     Washington, 


Govt,  print,  off.,  1915-. 

[First  report  "covers  the  period  of  16  weeks  from  the  organization 
of  the  commission  to  the  end  of  the  fiscal  year  1915"] 

Brief  sketch  of  features  of  the  legal  work  of  the 


Federal  trade  commission  and  inquiries  made  by  it  through 
the  economic  division  since  its  organization.  July,  1921. 
54  1.     (mimeographed) 


Conference  rulings  bulletin,  No.   i.     Washing- 
ton, Govt,  print,  off.,  191 6-. 

Federal   trade   commission   decisions :   findings. 


orders  and  conference  rulings,  March  16,  191 5,  to  June  30, 
1920.     Washington,  19 19- 1920.     2  v. 

Function    of    the    Federal    trade    commission. 


Aug.,  1 92 1.     7  1.     (mimeographed) 
Helpful  activities  to  strengthen  American  busi- 
ness.    Jan.,    1916.     [Statement    of    Edward    N.    Hurley, 
vice  chairman]     Washington,  Govt,  print,  off.,  1916.     4  p. 

Instructions,  rules  and  forms  concerning  patents, 

trade-marks,  prints,   labels  and  copyrights.     Washington, 
Govt,  print,  off.,  19 17.     14  p. 

Letter  of  the  Federal  trade  commission  to  the 


President  of  the  United  States.     Washington,  Govt,  print, 
off.,  1921.     8  p. 

Resolutions,   remarks  and  tributes   favorable  to 


the     Federal     trade     commission.     Aug.,     192 1.     15     1. 
(mimeographed) 

Rules     of     practice     before     the     Commission. 


Adopted  June   17,   1915,  and  amended  to  May  20,   1921. 
Washington,  Govt,  print,  off.,  192 1.     11  p. 

Laws,   statutes,   etc.     Federal   trade   commission  bill. 


Comparative  print,  showing  H.  R.  15613,  an  act  to  create 
an  interstate  trade  commission,  to  define  its  powers  and 
duties  ...  as  passed  by  the  House,  as  passed  by  the  Sen- 
ate, and  as  agreed  to  in  conference.  Washington,  Govt, 
print,  off.,  1914.  18  numb.  1.  (63d  Cong.,  2d  sess. 
Senate.  Doc.  573)  Serial  6592. 

The  Federal  trade  commission  law,  the  Clayton 

antitrust  law,  the  Webb  export  law,  and  rules  of  practice 
before  the  Federal  trade  commission.  Introduction  .  .  . 
notes  and  indices  prepared  by  Barry  Mohun.  Washington, 
1919.     41  p. 

H.  R.  1 5613,  act  to  create  Federal  trade  com- 


■ 


ti 


^2         THE  FEDERAL  TRADE  COMMISSION 

mission,  to  define  its  powers  and  duties,  and  for  other  pur- 
poses. Approved  Sept.  26,  1914.  8  p.  Also  in  38  Stat. 
L.,  pt.  I,  p.  717-24. 

President,  1^1^-1^21  (Wilson),     Address  of  the  Pres- 


ident of  the  United  States  dehvered  at  a  joint  session  of 
the  two  houses  of  Congress.  Jan.  20,  19 14.  Washing- 
ton, 1914.     8  p. 

[Recommends  establishment  of  an  interstate  trade  commission] 

Unofficial  Publications 

American  bar   association.     Committee  on  commerce,   trade 
and  commercial  law.     Report  [to  be  presented  at  the  meet- 
ing ...  at  St.  Louis,  Mo.,  Aug.  25-27,  1920]     21  p. 
"The   Federal   trade  commission  and   antitrust   laws,"   p. 
9-14. 

Barret,  Alex.  G.  The  Federal  trade  commission;  an  address 
.  .  .  July  8,  1915  .  .  .  Louisville,  Ky.,  Westerfield- 
Bonte  Co.   [1915]     41  p. 

Butler,  Rush  C,  and  Lynde,  C.  The  Federal  trade  commis- 
sion and  the  regulations  of  business  under  the  Federal 
trade  commission  and  Clayton  laws  .  .  .  Chicago,  Cal- 
laghan,   191 5.     103  p. 

The  case  of  the  Federal  trade  commission.  Originally  de- 
signed for  impartial  investigation,  the  commission  is 
charged  with  bias  and  abuse.  Nation's  business,  Oct., 
1918,  V.  6,  no.  10,  p.  9-1 1,  36. 

[Findings  of  a  committee  of  business  men  of  the  National  cham- 
ber of  commerce  concerning  activities  of  the  Commission] 

Chamber  of  commerce  of  the  United  States  of  America. 
Referendum  26.  On  the  Report  of  the  Federal  trade  com- 
mittee of  the  Chamber  regarding  trust  legislation.  Feb. 
I,  1919.     Washington,  1919.     15  p. 

Report  of  the  Federal  trade  committee  to  the  Board 

of  directors  .  .  .  [Washington,  1918]     10  p. 


BIBLIOGRAPHY 


73 


Claudy,  C.  H.  Federal  trade  commission  may  say  "do"  in- 
stead of  "don't."  Printers'  ink,  Jan.  15,  1920,  v.  no: 
85-87. 

["Investigation  of  the  activities  of  the  California  raisin  growers' 
association  may  result  in  change  in  the  Commission's  decisions"] 

On  the  government's  unfair  list.  Some  of  the  prac- 
tices the  Federal  trade  commission  says  you  mustn't  in- 
dulge in.     Printers'  ink,  March  11,  1920,  v.  no:  98-108. 

"Trade  practice  submittal,"   a  new  tool   in  business. 

Federal  trade  commission  endorses  the  best  customs  of  dif- 
ferent industries.  Printers'  ink,  March  25,  1920,  v.  no: 
141-148. 

Colver,  W.  B.  Federal  trade  commission  and  the  meat-pack- 
ing industry.  American  academy  of  political  and  social 
science.     Annals,  March,  1919,  v.  82:  170-4. 

Daish,  J.  B.  The  Federal  trade  commission.  Yale  law  re- 
view, Nov.,   1914,  V.  24:  43-55. 

The    Federal    trade   commission.      (Adidress  ...    be- 
fore the  20th  annual  convention  of  the  National  associa- 
tion of  credit  men  at  Salt  Lake  City.     June   18,    191 5) 
[n.p.,  n.d.]     8  p. 

Daish,  John  B.,  ed.  The  Federal  trade  commission  law  and 
related  acts  .  .  .  Washington,  D.  C,  Lowdermilk,  1914. 
42  p. 

Davies,  Joseph  E.  The  Federal  trade  commission  .  .  . 
Chicago,  Blackstone  institute.     [1917]     43  p. 

Federal  trade  commission  and  business — big  and  little. 

World's  work.  May,  1915,  v.  30:  1 10-14. 

Work  of  the  Federal  trade  commission.  {In  Wiscon- 
sin commercial  and  industrial  congress.  Papers  and  dis- 
cussions, 19 16,  V.  i:  168-75) 

Dunn,  Charles  W.  The  proposed  interstate  trade  commis- 
tion.     H.  R.  15613.      [N.  Y.,  1914]     47  p. 

Durand,  E.  D.  Creation  of  a  federal  trade  commission. 
Quarterly  journal  of  economics,  Nov.,  1914,  v.  29:  90-97. 

Emery,  Jame§  A,     A  handbook  of  the  Federal  trade  com- 


t 


74 


THE  FEDERAL  TRADE  COMMISSION 


mission  act;  a  review  of  its  legislative  history  and  of  the 
powers,  duties  and  procedure  of  the  commission,  prepared 
for  the  National  association  of  manufacturers  .  .  .  New 
York  city,  Issued  from  the  Secretary's  office,  191 5.  63  p. 
Fayne,  J.  A.  Federal  trade  commission:  the  development  of 
the  law  which  led  to  its  establishment.  American  political 
science  review,  Feb.,   191 5,  v.  9:  57-67. 

[Traced  by  reviewing  antitrust  cases] 

Foulke,  W.  D.  Interstate  trade  commission.  Journal  of 
political  economy,  April,  1912,  v.  20:  406-15. 

Gallagher,  M.   F.     Federal  trade  commission.     Illinois  law 
review,  May,  191 5.     v.  10:  3142. 
Read  before  the  Law  Club,  Chicago,  Jan.  29,  191 5. 

Goemann,  W.  P.  Federal  trade  commission's  report  on  co- 
operation in  American  export  trade*  American  economic 
review,  Dec,  1917,  v.  7:  923-6. 

Harlan,  John  M.,  and  McCandless,  L.  W.  The  Federal 
trade  commission,  its  nature  and  powers;  an  interpretation 
of  the  trade  law  and  related  statutes.  Chicago,  Callaghan, 
1916.     183  p. 

Harris,  W.  J.  The  work  of  the  Federal  trade  commission. 
New  Orleans,  19 16.     16  p. 

Harvey,  Richard  S.,  and  Bradford,  E.  W.  A  manual  of  the 
Federal  trade  commission,  presenting  the  origin,  develop- 
ment and  construction  of  the  antitrust  laws  .  .  .  Wash- 
ington, D.  C,  Byrne,  1916.     457  p. 

Hom-swoggling  the  business  man :  the  Federal  Trade  commis- 
sion resorts  to  the  conventional  roorback  when  reminded 
that  its  bias,  flightiness,  inaccuracy  .  .  .  are  producing 
gold  bricks  instead  of  regulation  twenty-karat  goods. 
Nation's  business,  Nov.,  1918,  v.  6.  No.  11,  p.  12-13,  4^- 

[Summary  of  reply  of  the  Federal  trade  commission  to  charges 
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chamber  of  commercel 

Houck,   S,  B.    Jurisdiction  and  procedure  of  the  Federal 


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trade  commission.     Illinois  law  review,   March,    1921,   v. 
15:  518-26. 
How    the    Federal    trade    commission    will    handle    cases. 

System,  Aug.,  1915,  v.  28:  221-3. 

Hurley,  E.  N.  Constructive  policy  of  the  Federal  trade  com- 
mission. (In  his  Awakening  of  business,  N.  Y.,  1916,  p. 
158-168) 

Federal   trade   commission  and  the   mining   industry. 

(In  American  mining  congress.     Report  of  proceedings, 

1916,  p.  442-51) 

Jouett,  E.  S.  The  inquisitorial  feature  of  the  Federal  trade 
commission  act  violates  the  federal  constitution.  Virginia 
law  review,  May,  1915,  v.  2:  584-98. 

Kerr,  W.  D.  The  trade  commission  and  the  courts.  Illinois 
law  review,  Dec,  19 14. 

Low,  Sefh,     Address  [before  National  civic  federation,  Dec. 
4,  1914]  New  York  [1915]     14  P- 
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Lynde,  C.  The  Federal  trade  commission  and  its  relation 
to  the  courts.  American  academy  of  political  and  social 
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McGlasson,  Oscar  B.  The  new  Federal  trade  commission 
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Merchant's  association  of  New  York.  Report  of  commit- 
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II  p. 

National  association  of  manufacturers  of  the  United  States 
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I       ! 


i  . 


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INDEX 


Administrative  division,  32. 

Anti-trust  acts,  Clayton,  1 1 ;  Fed- 
eral Trade  Commission,  7-10; 
Sherman,  2. 

Appeals  to  court,  number  of,  22; 
when  possible,  21. 

Appropriations,  66,  ^y. 

Board  of  review,  composition  of, 
34;  on  preliminary  investiga- 
tions, 18. 

Bribery,  commercial  report  on, 
23;  and  trade  associations,  23. 

Bureau  of  Corporations,  created, 
3,  4;  work  of,  5;  abolished,  8. 

Chief  clerk's  office,  33. 

Clayton  Act,  complaints  involv- 
ing, 22;  provisions  of,  11. 

Competition,  unfair  methods  of, 
22,  23. 

Complaint,  formal,  disposition  of, 
22 ;  method  of  serving,  19 ;  pro- 
ceedings, 20,  21 ;  required  an- 
swer to,  20 ;  violations  charged, 
22,  23. 

Complaints,  application  for,  19; 
preliminary  investigation  of, 
18 ;  starting  proceedings,  17. 

Conference,  ruling,   18,   19. 

Corporations,  Bureau  of,  see  Bu- 
reau of  Corporations. 

Cost  of  production  work,  12,  26. 

Courts,  appeals  by  either  party, 
21. 

Disbursing  office,  33. 
Docket  section,  33. 


Economic  division,  35. 

Examiner,  at  trial  of  formal  com- 
plaints,  21. 

Expenditures,  66,  6y. 

Export  trade  act,  complaints  in- 
volving, 23;  provisions  of,  14, 

15- 

Federal  Trade  Commission  Act, 
provisions  of,  7-10;  suggested 
provisions,  6. 

Foodstuffs,  special  investigation 
of,  30. 

Hospital,  34. 

Industrial  Commission,  recom- 
mendations of,  3. 

Industry,  government  control  of,  i. 
Investigational  branch,  34. 
Investigations,    preliminary,    18 ; 

special,  authority  for,  9,  10,  27, 

28;  made,  28;  methods  of,  29; 

of  foodstuffs,  30 ;  origin  of,  29 ; 

purpose  of,  2^. 

Legal   division,  34. 
Library,  34. 

Mail  and  files  section,  34. 
Master  in  chancery,  possible  ac- 
tivity, 24. 

Offices,  35 ;  branch,  36. 
Organization,  37-43. 

Patents  and  trading  with  the 
enemy  section,  34. 


79 


*• 


8o 


INDEX 


Personnel,  35 ;  section,  33. 
President,  delegates  powers  under 

Trading-with-the-Enemy     Act, 

13;  orders  cost  of  production 

work,  12. 
Proceedings,  method  of  starting, 

17;  under  formal  complaint,  20, 

21. 
Publications,  28,  29 ;  complete  list 

of,  46,  47;  section,  33. 

Reports,  corporation,  collection 
of,  6,  25,  26;  during  the  war, 
26;  authority  to  collect  ques- 
tioned, 27. 

Research  and  foreign  trade  sec- 
tion, 34. 

Secretary's  office,  32. 


Sherman  Anti-Trust  Act,  provi- 
sions of,  2. 
Stenographic  section,  33. 

Trade  associations,  and  commer- 
cial bribery,  23. 

Trade  Association,  export,  and 
unfair  methods  of  competition, 
31 ;  exempt  from  Sherman  Act, 
15;  number  of,  30. 

Trade  practice  submittal,  defini- 
tion of,  23,  24;  instances  of,  24. 

Trading-with-the-Enemy  Act, 
work  under,  13,  14. 

Trial  branch,  34. 

Wilson,  President,  recommenda- 
tion for  a  commission,  5. 

Witnesses,  fees,  20;  subpoenas 
for,  20,  21. 


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